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ხელოვნური ინტელექტის როლი სისხლის სამართალში - რეალობა და პერსპექტივა
No full textArtificial intelligence has recently become one of the hot topics in scientific and professional circles of various fields. Current technological processes in the world have significantly increased the use of digital technologies in practically all fields. Over the past century, several researchers and mathematicians have been developing the idea that computing machines can not only perform typical technical tasks but also learn to think and perform individual tasks accordingly, like humans. This idea has developed over time, and nowadays, the main topic among scientists, researchers, and practitioners worldwide is artificial intelligence and the tasks it can perform. Artificial intelligence is already actively used in various fields of public activity and many professions, and there is still talk that many professions can be replaced by artificial intelligence in the future. In this regard, using artificial intelligence in jurisprudence is particularly important and controversial. Based on the relevance of the mentioned issue, this article is dedicated to the use of artificial intelligence in the field of criminal proceedings and investigations. The article discusses the origin and development of artificial intelligence and its primary role in criminal proceedings and investigations. In the work, special attention is paid to the experience of different countries. The paper also analyzes court decisions of precedent importance in this regard. The paper also contains the main challenges of using artificial intelligence in criminal justice and investigation.
Keywords: Justice, ethics, technology.
Introduction
Nowadays, artificial intelligence and its role in various fields is one of the most relevant issues, and advice is given in almost all directions. With the development of technologies, it becomes increasingly important to set complex and large-scale tasks for artificial intelligence.
The issue has become particularly relevant in recent years. Various technologies based on artificial intelligence are improving more and more. In scientific and professional circles, the opinion is often heard that in a fairly short period, people will be replaced by the so-called Thinking Machines, and many scientists even express the opinion that many professions will no longer exist. Obviously, this will not be the first time for humanity; the history of human existence testifies that many professions have been replaced by technological progress, which is not strange. However, replacing a judge with a thinking machine is still strange. Many works can be found on the use of artificial intelligence in law. Still, this time, based on the issue’s relevance, our goal is to study in what part artificial intelligence can be used in criminal proceedings and investigations. To achieve this goal, the essence of artificial intelligence will be studied within the framework of the research, its capabilities, the area of its use, the existing practice of use, the approaches of different countries will be analyzed, and the author’s position on the following issues will be presented at the end of the paper:
Main challenges and weaknesses of using artificial intelligence in criminal litigation and investigation;
The current area of use of artificial intelligence in criminal proceedings and investigation and the perspective of its further use. 1. The History of Creation and Development of Aritifical Inteligence
A few people are considered to be the founders of artificial intelligence itself. First of all, Alan Turing’s contribution is noteworthy in this regard. He is often referred to as the father of artificial intelligence. Turing’s 1950 scientific work “Computing Machine and Intelligence” is noteworthy in this regard. The paper presented the concept of a computing machine with human intelligence. Turing’s thinking laid the foundation for further development of artificial intelligence - i.e. To create a computing machine that thinks like a human.[1] Later, the topic was developed by John McCarthy, a professor of mathematics, who used the term “artificial intelligence” in 1956. It was under his organization that the Darthmuz conference was organized in 1956, where the phenomenon known to us today was called artificial intelligence, and this practically laid the foundation for the development of this great direction, thus artificial intelligence even became a separate discipline.[2] McCarthy co-founded the MIT AI LAB with Marvin Minks, and in the fields of robotics and cognitive psychology, Minks made virtually inestimable contributions to the development of artificial intelligence.[3] Later, Herbert Simon and Allen Newell developed early artificial intelligence programs that were focused on solving human problems. This laid the foundation for the “thinking” of artificial intelligence, according to how it would be possible to use human cognitive skills for a computing machine.[4] Arthur Samuel, who created one of the first self-learning programs in the fifties of the last century, proved that a computer can learn from experience.[5] The analysis of modernity reveals that in the development of artificial intelligence, Geoffrey Hinton, Joshua Bengio and Ian Lekun have also made special contributions, and that’s why Hinton is called the godfather of artificial intelligence.[6]
In addition to science and researchers, organizations have made the greatest contribution to the development of artificial intelligence. Thanks to an IBM project and artificial intelligence, in 1997, chess champion Garry Kasparov was defeated by artificial intelligence, proving that it can be used in strategy games.[7] Google DeepMindm did a similar project with Go World Champion Lee Sedol in 2016.[8]
2. The Role of Artificial Intelligence in Crime Prediction and Analysis
Along with the development of artificial intelligence, an irreversible process of its application in various fields has started step by step, and law is no exception in this regard. From an early stage of development, the field of criminal justice and investigations has used artificial intelligence as part of investigative data analytics to make it easier for investigative agencies to manage critical operational investigative information and identify suspects by following data patterns.[9] Early applications of artificial intelligence in criminal justice included the use of data analytics to manage and analyze crime databases. For example, the Federal Bureau of Investigation (FBI) created the National Crime Information Center (NCIC) in the 1960s, which used computer systems to efficiently store and retrieve criminal records.[10] Since 1990, artificial intelligence has been actively used for prediction in criminal proceedings and the fight against crime.[11] Law enforcement agencies have begun experimenting with predictive policing methods. These models used statistical techniques to predict future crime hotspots. This model laid the foundation for today’s sophisticated forecasting systems using artificial intelligence.[12] The IBM organization also made a special contribution in this case and, in cooperation with various police departments, implemented a number of important projects in the creation of a crime analysis and prediction system using artificial intelligence.[13]
3. Artificial Intelligence in Contemporary Criminal Proceedings
Nowadays, artificial intelligence is used even more actively in criminal proceedings and investigations. Artificial intelligence in criminal law involves a technological process (algorithms, language processing, computer vision) designed to perform tasks that normally require human intelligence, human intervention. All these technological processes are focused on increasing the efficiency of the investigative and justice process. In this regard, even today, one of the main missions of artificial intelligence in criminal law is prediction.[14] In particular, analysis of existing data based on various sources, for future crime prediction and prevention. A good example is the experience of the Los Angeles Police Department (LAPD), which introduced the Predpol program for more efficient use of police resources and, accordingly, to increase the efficiency of police work. The Chicago Police Department uses artificial intelligence to identify individuals who are at high risk of committing violence. This has helped to prevent violence across the state.[15]
Artificial intelligence systems can process large amounts of data better than humans, so it is often used to process such voluminous investigative information. For example, the New York Police Department (NYPD) uses pattern recognition software to analyze information important to investigations and identify serial criminals, which helps them work more efficiently.[16]
We must not forget the research part as well. Artificial intelligence is a very effective tool for research. Even LexisNexis or HeinOnline helped lawyers and judges find the necessary information in their time. It is safe to say that artificial intelligence has made it even easier. In some jurisdictions, the courts use artificial intelligence as a decision-making tool. This does not apply to all decisions. Such systems analyze past cases and outcomes to provide recommendations to reduce bias and improve the consistency of judicial decisions, ensuring uniformity of judicial practice. However, the use of artificial intelligence in this field has led to differences of opinion about the risks of algorithmic bias and the transparency of decision-making processes.[17] No less interesting is the Estonian experience, which created a judge with artificial intelligence, which aims to consider small disputes, which ultimately significantly relieves the judicial system.[18]
4. The Analysis of Different Countries’ Experiences
Comparative studies prove that the tasks described above can be performed smarter and more effectively using artificial intelligence, which improves the quality of the work performed. Nevertheless, it should be noted that using artificial intelligence to perform such tasks poses a rather acute ethical issue. It is about the transparency and accountability of decisions based on artificial intelligence.[19] It is impossible not to mention here that one of the biggest challenges in processing important information for legal proceedings through artificial intelligence is the issue of personal data protection. Although the use of artificial intelligence in criminal proceedings and investigations is at first glance a novelty, many countries already have many years of experience in using artificial intelligence in this field. In this regard, first of all, the experience of the United States of America we described should be mentioned above. It has been using artificial intelligence for a long time in crime prediction and prevention. Among them, as mentioned above, special programs (Predpol, Compstat) are used for crime analysis and management.[20]
The People’s Republic of China is a leading country in terms of the most widespread and unrestricted use of artificial intelligence. Artificial intelligence is used for total surveillance in China, one of the goals of which is crime prevention. Thousands of so-called facial recognition devices are installed throughout the country, and a smart camera is integrated with the social credit system, thus ultimately evaluating the citizens.
Obviously, this system of assessment goes beyond the goals of criminal law, and it is also undisputed that this system of surveillance has developed, especially in China, to the extent that prohibitions and restrictions in relation to democratic values are not found in this country.[21]
As for European countries, in the wake of the development of artificial intelligence, more and more attention is being paid to personal data protection regulations in these countries in order to exclude the misuse of artificial intelligence that would violate human rights and affect people’s personal lives, etc. For example, United Kingdom police agencies use AI-based programs to predict crime, subject to ethical and legal constraints. Germany actively uses artificial intelligence in legal research, in full compliance with the principles of good faith. France, Japan, South Korea, and India also use AI for crime prediction/analysis and scientific research, subject to ethical and legal constraints.[22]
5. The Analysis of Judicial Practice
Obviously, in this case, a certain practice was adopted. In 2016, a court case was reviewed in the United States of America: Loomis v. Wisconsin. Eric Loomis was sentenced to 6 years in prison based on a risk assessment calculated using the Compas (Correctional Offender Management Profiling for Alternative Sanctions) algorithm. Loomis disputed using this program and algorithm to determine his fate, appealing that it violated his due process rights because the evaluation process was completely opaque to him, and it remained unclear how the algorithm arrived at such a risk score. The court did not share the person’s position based on the argumentation that this was not the only indicator on which the court made its decision. Therefore, although the appellant’s request was not satisfied, the case is precedent based on this argumentation.[23] No less precedential was the case from the UK judicial practice - R. (Bridges) v. Chief Constable of South Wales police. In 2020, a person challenged South Wales Police’s use of a facial recognition system, claiming it breached his right to privacy, the European Convention on Human Rights and the Data Protection Act. The court considered the appellant’s opinion and granted his request, noting that the police did not realize how large and harsh the impact of such systems was on people’s privacy and confidentiality and the protection of personal data. This decision also sets a precedent in the sense that despite the great influence of technological processes and artificial intelligence in the world, it is necessary to maintain a balance to avoid the abuse of rights and gross infringement of personal data.[24] Speaking about practice, it is impossible not to analyze the practice of the European Court of Human Rights. In one of the decisions (the case related to the situation when the bank evaluated credit applications through a special program), the court noted that transparency and accountability in the decision-making process are important when using artificial intelligence. An individual has the right to have an automated decision reviewed by a human. Automatic decisions that significantly affect the fate of a person must be explained and justified.[25]
Conclusion
Therefore, there is no doubt that the creation and development of artificial intelligence results from the joint work of many scientists and organizations, and many people and organizations have been involved in this chain. Alan Turing and John McCarthy are still considered pioneers in this field because they laid the foundation for such capabilities of the computing machine as the idea. Subsequently, Hinton’s team’s contribution to developing this idea is immeasurable, and finally, such large organizations as IBM and Google DeepMind have better demonstrated the capabilities of artificial intelligence in practice.
Therefore, it seems that a large number of countries are using artificial intelligence in criminal proceedings, investigations and scientific activities. However, their attitude is different. For example, China focuses more on population control and does not consider human rights; in the United States of America, it is mostly used in crime analysis and prediction. Obviously, the country pays a lot of attention to human rights. However, in this case, in terms of personal data, we do not have such strict regulations here as in many European countries, where artificial intelligence is also used, although the greatest attention is paid to human rights and personal data. In European countries, human rights and privacy are considered to be of paramount interest when using artificial intelligence technologies.
The cases we discussed above illustrate the growing trend of using artificial intelligence in criminal proceedings and investigations. In general, the justice systems of various countries support the use of artificial intelligence only on the condition that the process is transparent and that it is not the only prerequisite for determining substantive legal consequences. It is also important that artificial intelligence systems are free from bias and take into account the rights of individuals - the inviolability of their private lives.
Although technologies and programs based on artificial intelligence have greatly facilitated the tasks in criminal proceedings and investigations, it is clear that we face certain risks and challenges. First of all, in the conditions of such systems, the probability of error is quite high. Therefore, it is very important to assemble and generate them correctly. For the system’s proper functioning, it is very important to correctly generate and reflect the existing data because a mistake made here can lead to an incorrect or discriminatory decision. Unlike humans, artificial intelligence will not be self-critical about its own decisions. The biggest challenge is privacy and personal data; when using artificial intelligence systems on a massive scale, it is important to maintain the necessary balance and data security. One of the ethical issues is that the decisions made by this system should be transparent, and there should be a system of accountability. The use of artificial intelligence in criminal law in different jurisdictions is associated with substantial challenges, as legal standards, regulations, and cultural attitudes towards artificial intelligence vary widely. Along with the development and improvement of artificial intelligence in the field of criminal proceedings and investigation, it is expected:
To improve the police forecasting systems, to create even more complete algorithms that will combine a large amount of data with the help of which the algorithm will be able to perform the closest to reality, perhaps the most inaccurate, forecast in this regard better than people and criminologists;
Artificial intelligence technologies will be used more and more in the examination, so it will be possible to obtain and attach more evidence, and this evidence will be more accurate and reliable;
Artificial intelligence technologies will increasingly make it possible to restore the most accurate crime scene or route, which will obviously make the response to it and the investigation process more complete;
Artificial intelligence technologies will facilitate the management of inmates in prisons, including tracking their behavior and planning personalized responses, including rehabilitation.
The extent to which artificial intelligence can replace judges is a separate discussion. In addition to the ethical objections discussed above, another objection arises. In particular, we are talking about such a necessary component of implementing justice as the inner faith of the judge. Could a computing machine have internal beliefs? Of course it can, although it may have an internal belief such that humans again write it with an appropriate algorithm. Will the calculating machine be able to evaluate such circumstances as extreme cruelty? Sincere repentance of actions by a person, etc. The answer to this question is rather vague and ambiguous. It is clear that artificial intelligence technologies are improving more and more, and their application area is expanding more and more. It is also undisputed that the idea looks quite attractive in the background of an overburdened judicial system. However, the real perspective of its implementation is rather vague at this stage.
Bibliography
References/Monographs
Dormehl, L. (2017). Thinking Machines. USA, New York, TarcherPerigee;
Ashley, K. D. (2017). Artificial intelligence and legal analytics. Cambridge University press, UK;
Kelly, W. R. (2016). The future of crime and punishment: Smart policies for reducing Crime and saving money. Rowman & Littlefield Publishers, USA;
Antunes, H. S., Freitas, P. M., Oliviera, A. L., Pereira, C. M., Sequiera, E. V., Xavier, L. B. (2023). Multidisciplinary Perspectives on Artificial intelligence and the Law. Springer, Spain;
Scientific Articles
Turing, A. M. (1950). Computing machinery and intelligence. Mind, Volume LIX, Issue 236;
Moor, J. (2006). The Dartmouth College Artificial Intelligence Conference: The Next Fifty Years. AI Magazine, Volume 27;
Gugerty, L. (2006). Newell and Simon’s Logic Theorist: Historical Background and Impact on Cognitive Modeling. Proceedings of the Human Factors and Ergonomics Society Annual Meeting, 50(9);
Samuel, A. (1992). Arthur Samuel: Pioneer in machine learning. BM Journal of Research and Development, 36(3);
Newborn, M. (2000). Deep Blue’s contribution to AI. Annals of Mathematics and Artificial Intelligence, 28(1-4);
Gund, P., Phalke, V. S. (2023). Investigating crime a role of Artificial intelligence in criminal Justice. The Online Journal of Distance Education and e-Learning, Vol. 1;
Kabol, A. F. (2022). The Use Of Artificial Intelligence In The Criminal Justice System (A Comparative Study). Webology, 19(5);
Bendouzid, B. (2019). To predict and to manage. Predictive policing in the United States. Big Data & Society, 6(1);
Vasdani, T. (2023). From Estonian AI Judges to robot mediators in Canada. U.K, The Lawyer’s Daily, Vol. II;
Wischmeyer, T. (2020). Artificial intelligence and transparency: Opening the black box. Regulating Artificial Intelligence;
Mugari, I., Obioga, E. (2021). Predictive Policing and Crime Control i
Considering AI-Generated Paintings as Artworks in the EU for the Purposes of Museum Exhibitions
Full text linkThe presented article represents an attempt to assess the possibility and perspectives of considering AI-generated works as artworks and objects of museum exhibitions in the European Union. The purpose of the work is to assess whether AI-generated works can be recognized as artwork and if such works can be placed at museums or, on the contrary, if museums are eligible to exhibit and protect works that do not match the definition of the artwork.
For the purposes of the article, legal definitions of the artwork and AI are primarily explored to detect possible authorship and legal subjectivity of the artificial intelligence. Accordingly, the next core topic of discussion is the capacity of museums to maintain ai-generated works explored from the perspective of the definition and purpose of museums as institutions.
The article contains reasoning and assumptions regarding possible scenarios of the authorship of AI and prognoses about awaited legal challenges in the near future. Not all questions raised by the author are met with unambiguous answers, and they are left open for discussion until further development of legal frameworks and case law acquires a certain direction.
Keywords: Artificial Intelligence, AI-generated works, Artwork, AI and copyright, AI as the subject of law, Museums, and AI.
Introduction
The development of Artificial Intelligence (AI) and the dynamic of increasing the realistic character of artworks created using AI gives the basis to expect that besides obtaining popularity among lovers of reproductions, in the nearest future, the issue of considering AI-generated works as artworks will become a topic of frequent discussions. Consequently, the discussion about the legal and ethical aspects of exhibiting such works acquires further relevance. This issue can be especially vulnerable for the museums and galleries, as they set their reputation at risk in case of providing wrong data about the legal status of the item and related copyright, and such actions may also contradict their essential objectives.
The article is drafted based on the hypothesis that AI-generated works should not be considered artworks, accordingly, they should not be objects of the same legal protection and not safeguarded by the museums.
The presented article aims to explore the challenges of detecting the legal nature of AI-generated works to draft effective recommendations based on the Common European legal framework for museums to tackle the challenge efficiently. Accordingly, the final product will serve as material for further scientific research and as a guideline for corresponding art institutions or lawyers in the field.
The article will primarily concentrate on doctrinal methods of research, especially on exploring the caselaw of the Court of Justice of the European Union (CJEU) and corresponding legal frameworks or policy documents. Besides, the methods of analysis and synthesis will also be applied to draft some assumptions and recommendations. Additionally, comparative analysis will serve for a diverse and comprehensive exploration of the topic.
1. AI as Subject of Law Regarding Copyright
Detection of the legal status of AI-generated works is directly connected to defining the legal notion of the artwork itself and the probability of considering AI as the subject of legal transactions.
1.1. The Notion of Art and Artwork in the EU
Defining the legal notion of the artwork and art is a key pre-step of effective detection of the legal status of the creator of the artwork. The terms “art” and “artwork” do not have universal legal definitions in the EU, but their essence can be detected in various legal acts. For example (f.e.), the early Directive 2001/84/EC under the term “original work of art” considers works of graphic or plastic art such as pictures, collages, paintings, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics, glassware, and photographs, provided they are made by the artist himself or are copies considered to be original works of art.[1] The same directive also defines that those copies of works of art covered by this Directive, which have been made in limited numbers by the artist himself or under his authority, shall be considered to be original works of art for the purposes of this Directive. Such copies will normally have been numbered, signed, or otherwise duly authorized by the artist. [2]
It is worth noting that Directive 2001/29 also admits and protects reproduction rights but considers works created by human authors under the field of protection (“Member States shall provide for the exclusive right to authorize or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part”… for participants of the legal transaction described by the directive),[3] and grants the authors with exclusive rights related to the exhibition of their works (Member States shall provide authors with the exclusive right to authorize or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them (§1). Member States shall provide for the exclusive right to authorize or prohibit the making available to the public, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them... (§2)).[4]
Artwork may also belong to the category of cultural goods, as according to the Regulation (EU) 2019/880, “cultural goods” means any item which is of importance for archaeology, prehistory, history, literature, art, or science (art. 2, cl. 1), particularly objects of artistic interest, such as pictures, paintings and drawings produced entirely by hand on any support and in any material (excluding industrial designs and manufactured articles decorated by hand); original works of statuary art and sculpture in any material; original engravings, prints and lithographs; original artistic assemblages and montages in any material.[5]
The interesting reasoning is provided by the CJEU in the judgment Infopaq International A/S v. Danske Dagblades Forening, declaring that “Copyright within the meaning of Article 2(a) of Directive 2001/29 is liable to apply only in relation to a subject matter which is original in the sense that it is its author’s intellectual creation. As regards the parts of a work, they are protected by copyright since, as such, they share the originality of the whole work. The various parts of a work thus enjoy protection under that provision, provided that they contain elements which are the expression of the intellectual creation of the author of the work.”[6] The Court derived from the provisions of the Berne Convention and mentioned that the protection of certain subject matters as artistic or literary works presupposes that they are intellectual creations.[7] According to the judgment, the Berne Convention declares that the expression “literary and artistic works” shall include every production in the literary, scientific, and artistic domain, whatever may be the mode or form of its expression, such as … works of drawing, painting, architecture, sculpture, engraving, and lithography; photographic works to which are assimilated works expressed by a process analogous to photography; works of applied art; illustrations, maps, plans, sketches and three-dimensional works relative to geography, topography, architecture or science.[8] Later, in 2019, the court mentioned that the original artworks reflect the personality of its author as an expression of the author’s free and creative choices.[9]
Some answers and interpretations can be found in the relevant caselaw of the CJEU. In the judgment Levola Hengelo BV v. Smilde Foods BV. (2018), the court evolved reasoning that two cumulative conditions must be satisfied for subject matter to be classified as a work within the meaning of Directive 2001/29 (§35). First, the subject matter concerned must be original in the sense that it is the author’s intellectual creation… (§36), secondly, only something that is the expression of the author’s intellectual creation may be classified as a ‘work’ within the meaning of Directive 2001/29 (§37).[10]
Using creatures of technology by the authors does not exclude them from the circle of artworks. F.e., CJEU admits that a photograph may be protected by copyright if it is the intellectual creation of the author reflecting his personality and expressing his free and creative choices in the production of that photograph.[11]
The identic approach is formed by the courts of Common Law countries. F.e., in Case Thaler v. Perlmutter, the District Court of Columbia formed a reasoning that “Copyright is designed to adapt with the times. Underlying that adaptability, however, has been a consistent understanding that human creativity is the sine qua non at the core of copyrightability, even as that human creativity is channeled through new tools or into new media… for example, the photographs amounted to copyrightable creations of “authors,” despite issuing from a mechanical device that merely reproduced an image of what is in front of the device because the photographic result nonetheless “represent[ed]” the “original intellectual conceptions of the author.” A camera may generate only a “mechanical reproduction” of a scene but does so only after the photographer develops a “mental conception” of the photograph, which is given its final form by that photographer’s decisions like “posing the [subject] in front of the camera, selecting and arranging the costume, draperies, and other various accessories in the said photograph, arranging the subject to present graceful outlines, arranging and disposing of the light and shade, suggesting and evoking the desired expression, and from such disposition, arrangement, or representation” crafting the overall image”.[12]
High-presented legal notions define art and artworks as a materialized expression of human consciousness and feelings that can describe the personal attitude of the artist to various aspects of social life.
The social value and function of the artwork are wider than is prescribed by various legal acts, and it is primarily determined by the purpose and the main idea of the artwork that the author aimed to express via the artwork directly or using allegories. In the “Manifesto on the Freedom of Expression of Arts and Culture in the Digital Era” it is mentioned that “…experts and cultural professionals who hint at problems, spell out uncomfortable truths, speak the unspoken and make the unseen visible – using their artistic and cultural means and creating spaces for societal debate within and beyond the mainstream bodies of political discourse and in social media.”[13]
1.2. AI as a Potential Creator of the Artwork
From the perspective of a comprehensive analysis of the topic, the definition of AI is also worth being distinguished. It can be found in various legal acts. For example, the CoE Framework Convention on AI and Human Rights and Democracy and the Rule of Law defines an “artificial intelligence system” as a machine-based system that, for explicit or implicit objectives, infers, from the input it receives, how to generate outputs such as predictions, content, recommendations or decisions that may influence physical or virtual environments.”[14]
Deriving from the legal notion of “artwork”, the opportunity of considering AI as a creator of the artwork practically equals zero, but such a condition may be changed, as the existing legal point of view is determined by various circumstances, including the fact that the legal notion of the “artwork” represents a traditional, conservative approach formed in the era, when gadgets could not have been believed to be self-governing performers of some tasks. Additionally, it can be affected by the extremely cautious attitude of the judiciary to restrain from evolving such reasoning, where AI can be described as a potential participant in legal transactions.
However, an overview of legal history contains epochs when different subjects or objects were considered to be participants of legal transactions or, on the contrary, excluded from such a group. F.e., in the early development of human society, objects and animals used to be “found guilty” and sentenced to various penalties, while representatives of certain classes of the society were considered to be equal to things and deprived of their rights. Quite a lot of such examples can be found in the legal history of ancient Rome, Greece, Egypt, etc. On the contrary, the development of economic relations caused the creation of legal entities, but such news was widely rejected by distinguished representatives of legal society as they could not imagine non-human beings as legal actors, even though even Ulpian used to be an author of the first concepts of legal entities in the II-III centuries A.C., already used to write unions like legal entities. Currently, legal entities represent almost full-fledged participants in legal transactions and subjects of essential human rights according to their applicability. F.e., Sunday Times v. the United Kingdom was the first case where the European Court of Human Rights (ECHR) found a violation of the Freedom of Expression (Art. 10) against the legal entity. In later judgments, the Court referred to issues of protecting dissemination systems, including oral, printed form, radio broadcast, painting, and other forms of expression.[15]
Recognition of AI as a subject of law is more challenging, especially when AI-governed machines in an existing form lack the component of personality,[16] but besides the existence of the uniform case law, the discussion about the legal subject status of AI demonstrates growing interest from legal scientists. According to one of the viewpoints detected in legal literature, „personality is established when a legal assumption is updated in reality as long as it is foreseen in a general norm of law that describes a determined situation of fact where the subject or undetermined person is, with the purpose to individualize it as a holder of determined rights or certain obligations in a specific juridical relationship”.
Besides, the modern challenge of discussing AI-powered gadgets as “participants” of legal transactions keeps being an upcoming topic of discussion, some more circumstances may be revealed to assess the possibility of declaring AI as a potential creator of the artwork.
The uniform case law of the CJEU set the tendency that an intellectual creation should reflect the author’s personality (§88). So, the author should be able to express his creative abilities in the production of the work by making free and creative choices (§89).[17]
So far, unless a unified caselaw develops clear reasoning about possible scenarios of acknowledging AI as a potential subject of law, evolving an unambiguous hypothesis is quite difficult, especially if considering the point of view of various scientists, who highlight the impossibility of the creation of fluent artificial intelligence, as the essence intelligence cannot be understood completely.[18] However, the modern approach is reasonably different, and signs of possible recognition of AI as a subject of law are detected in some legal provisions. Primarily should be distinguished two legal acts within the jurisdiction of the EU they are the so-called Resolution on Civil Law Rules of Robotics and the so-called AI Act[19], which was adopted recently. The first legal act calls on the Commission to create a specific legal status for robots that make autonomous decisions or otherwise interact with third parties independently. According to the act, the European Parliament calls on the Commission, when carrying out an impact assessment of its future legislative instrument, to explore, analyze, and consider the implications of all possible legal solutions, such as creating a specific legal status for robots in the long run, so that at least the most sophisticated autonomous robots could be established as having the status of electronic persons responsible for making good any damage they may cause, and possibly applying electronic personality to cases where robots make autonomous decisions or otherwise interact with third parties independently.[20] The second and the newest international legal act is the so-called AI Act, which represents a combination of several legal acts and creates a general legal platform. According to the interview with Secretary General of the Council of Europe Marija Pejčinović, expectations towards the AI Act are quite high as this should serve as the first universal legal framework regulating the sphere. According to the words of the Secretary General of the Council of Europe, “the text strikes the right regulatory balance precisely because it has benefitted from the input of governments and experts, and industry and civil society… After its adoption by the Committee of Ministers in the coming weeks, countries from all over the world will be eligible to join it and meet the high ethical standards it sets”.[21]
Considering the arguments enumerated by the courts and the specifics of the creation of works by AI comes a legitimate expectation that in the near future, the issue will acquire a more problematic character. European Parliament’s 2020 Report on AI and Intellectual Property Rights also admits that AI challenges the traditional understanding of artwork, and it may be the object of further discussions.[22]
The supporters of declaring AI-generated work as artwork may base their opinion on the argument that creating objects by AI also needs human participation, as humans are the ones who draft a description of the product expected from the AI-governed machine. In such a composition of the circumstances, AI creates a work based on a human mindset.
The potential object of discussion may become cases when AI with a certain level of autonomy of the software generates a painting according to the instructions of a human. Like the case with photography, when a managing human can have a theoretical opportunity to use software to administer the process of generating works by AI. The question is how the level of human involvement in the process of forming the final work should be measured and if such outcomes can be predicted by the humans while forming the instructions for the AI-powered gadget.
The above-mentioned topic should also be left open unless the corresponding political will of developing such legal institutes becomes relevant and the ability of humans to predict features of AI-generated products can be assessed by corresponding technical inspection. From the perspective of museums, such theoretical reasoning is less important at the moment but represents an issue of raising relevance, so it is worth mentioning.
2. Capacity of the Museums to Exhibit AI-generated Works
Finding solutions for modern legal problems requires up-to-date solutions. Legislation may lack the existence of provisions designed in a manner that newly raised circumstances could be foreseen. Such a situation is detected regarding the exhibition and protection of AI-generated works by the museums.
The existing legal framework of the EU does not contain direct provisions referring to the high-distinguished issue, but certain norms could be interpreted regarding the question.
First of all, the term “museum” should be defined because besides the traditional understanding of museums, so-called digital display museums also do exist, and the concept of their work is reasonably different from the classic understanding. Such museums represent organizations that provide 2D or 3D shows for the customers and display the works in digital reality. As a rule, such museums exist independently, but the combinations of traditional and digital display museums are also quite frequent.
According to the definition of a museum formed by the Museums Association in 1998, “Museums enable people to explore collections for inspiration, learning, and enjoyment. They are institutions that collect, safeguard and make accessible artifacts and specimens, which they hold in trust for society”.[23] In 2022, the International Council of Museums (ICOM) approved the proposal for the new definition of a museum. It defines that “A museum is a not-for-profit, permanent institution in the service of society that researches, collects, conserves, interprets and exhibits tangible and intangible heritage. Open to the public, accessible, and inclusive, museums foster diversity and sustainability. They operate and communicate ethically, professionally and with the participation of communities, offering varied experiences for education, enjoyment, reflection and knowledge sharing.” [24] It deserves mentioning that ICOM was one of the first organizations that raised an issue of the need for a legal definition of a museum because that seemed relevant both from the perspectives of law and ethics. [25]
According to the definition and corresponding legal framework, museums are eligible to organize not only physical but also digital and online exhibitions. Directive (EU) 2019/790, also known as (the DSM Directive), states that “an online content-sharing service provider shall therefore obtain authorization from the rightsholders referred to in Article 3(1) and (2) of Directive 2001/29/EC, for instance by concluding a licensing agreement, to communicate to the public or make available to the public works or other subject matter”.[26] The directive det
სააღსრულებო სისტემის ორგანიზაციული სტრუქტურა საქართველოში (აღსრულების შერეული სისტემისა და სააღსრულებო წარმოებაში მონაწილე პირთა ძირითადი უფლებების დაცვის ჭრილში): (In terms of a mixed system of enforcement and protection of basic rights of persons participating in theenforcement proceedings)
No full textTimely and efficient enforcement of court decisions is the most important process for any legal state since the power of the law lies in its enforcement. The effectiveness of the enforcement process may have a significant impact on the development of the socio-economic situation of the country, as well as positively affect the level of public confidence in the court. The effectiveness of the enforcement process largely depends on a well-functioning enforcement system; therefore, it must have maximum independence, and flexibility and, at the same time, be focused on the protection of basic human rights and freedoms. Its organizational arrangement and the levers of enforcement implementation, the rights and duties of the persons participating in the enforcement proceedings, as well as the scope of authority of the bailiff as an enforcement entity in the process of enforcement proceedings are important, along with this, the existence of the private bailiff institution in Georgian enforcement law is of the utmost importance. Based on the foregoing, the article reviews the development of the enforcement system in Georgia, the structure of the National Bureau of Enforcement and its powers and the peculiarities of the work of a private bailiff. The importance of the principle of protection of balance and proportionality between the persons participating in the enforcement proceedings is also reviewed and the author’s vision regarding each issue is presented to eliminate the gaps in practice.
Keywords: Structure, Enforcement, System, Protection
Introduction
The enforcement of valid court decisions is an act of exercising supreme authority in a modern, legal state. Accordingly, the enforcement system in the country should be efficient and independent as much as possible and, most importantly, there should always be a red line on the protection of basic human rights and freedoms.
The power of the law lies in its enforcement: The right to request the enforcement of a legally binding decision is equal to the right of a person to apply to the court to protect his/her rights and freedoms. The level of public confidence in the courts is of great importance in a legal state, which obviously cannot be achieved if the decisions made by the court are not implemented quickly and flexibly.[1]
As in other European countries, sharing the practice of the European Court of Human Rights by national courts, analyzing precedential decisions and integrating national law with European law is also of particular importance in Georgia. The European Court of Human Rights has repeatedly discussed the importance of effective enforcement of decisions. In one precedent case (Hornsby v Greece), the Court explained that “the enforcement of any decision made by a court shall be regarded as an integral part of the “judicial process”.[2] As for the enforcement process itself, it must be transparent, and several basic principles must be respected so that no party’s interests are harmed and/or vice versa: no one is given an unjustified advantage. In another high-profile case “IZA LTD and Makrakhidze V. Georgia” the assessment of the Strasbourg Court was as follows: - “In connection with the fact, that the state failed to ensure the enforcement of the binding decision within four years, there was a violation of the right under Article 6 of the European Convention on Human Rights“.[3] The Court reiterates that the right to a fair trial includes the right to enforce a final judgment. This right would be unrealistic if the national legal system of the High Contracting Party made it possible for a final judgment in force to remain void to the detriment of one party.[4]
One of the most important decisions in this regard was also Kyrtatos v. Greece - The applicants won a case concerning local planning decisions affecting their property. The local government authorities avoided the execution of the court decision for more than seven years, thus they effectively lost the meaning of Article 6 of the European Convention on Human Rights. Any complaint related to the delay in the execution of a legally binding judgment is considered by the Strasbourg Court not in the context of “justice” but about the “right to a judicial review”, and to determine whether the essence of the right has been violated by the non-enforcement of the court decision, such criteria as the complexity of the case, specific circumstances, behaviour of the parties, etc. are taken into account.
Based on its practice, the European Court of Human Rights constantly emphasizes that the principle of the rule of law can be implemented only if effective enforcement of the decisions made by the court and other competent bodies is guaranteed.
The execution of decisions should ensure the restoration and protection of the rights of entities participating in legal processes, as well as the gradual development of legal, economic and other types of relations between states both at the internal state and international levels. In connection with the fact that “Compulsory execution” in itself implies the use of force and interference with the basic rights of a person (a party to enforcement proceedings and/or a third party) - it is necessary that the existing enforcement system in the country makes it possible to protect the interests of the parties proportionately during enforcement processes.[5]
In one of the precedent decisions, Apostol v. Georgia, which referred to the meaning of enforcement, the European Court of Human Rights explained: “The jurisdiction of the court is not merely a theoretical right to have its final decision recognized, but this right also implies the enforcement of the final decision”.[6]
Enforcement proceedings are organized differently in all states, which is due to the legal traditions and system of each country, however, in any case, the national legislation must be consistent with the main international standards or principles established in the field of enforcement. In connection with the fact that the enforcement process has a great role in the economic, social and many other aspects of the development of the country, the state needs to share the best and most sophisticated practices of the enforcement system of foreign countries. The system should be focused on the protection of human rights as much as possible, regardless of which side of the proceedings a person represents: a creditor, a debtor or a third party.
Based on the foregoing, this article aims to review the existing enforcement system in the country, the main enforcement institutions and the basic principles that should be present as a red line in the entire process of enforcement proceedings. The protection of the proportionality principle is especially important, which means that the interests of any of the parties participating in the enforcement proceedings will not be harmed, and/or any of them will not be given an unjustified advantage.
1. Development of the Enforcement System in Georgia
Throughout the centuries as in the legal systems of other countries of the world, in Georgia too, proper importance was not given to the execution of legally binding decisions and other acts made by the court and other authorized bodies, however, in recent years, the mentioned approach has changed radically, and as of today, the execution of decisions has already taken one of the important places among legal processes. “Along with setting the XXI century, the economy is in decline and when the economy is going through hard times, clients need more than ever to collect debt and enforce judgments to keep their businesses viable”.[7]
Justice in Georgia is implemented by the judicial authority - it issues a decision on behalf of the country. The issuance of the said decision itself implies the mandatory nature of its execution. The right to a “Fair Trial” includes, not only the right to apply to the court and decide the case impartially but also the right to its proper execution. Non-enforcement of the court decision is equal to a violation of the right to appeal to the court.
A brief historical excursus of the development of the enforcement system in Georgia is as follows: Even in ancient, there were various enforcement mechanisms of court decisions in Georgian law which represented a guarantee of the protection of the rights of the parties involved in the proceedings.[8]
In the last century, the first signs of the formation of the enforcement system in the country are related to the period when the new civil code was enacted, as a result of which the enforcement service was created in the Ministry of Justice. The abovementioned service had a formal character and obviously, the scope of independence that this service had as a legal entity was also formal. In such conditions, it was certainly unnecessary to talk about the flexibility and efficiency of the system.[9]
Since 2001, the Enforcement Service has been transformed into the Enforcement Department, and several significant changes have been made in the field of enforcement, both in terms of legislative and structural arrangements. The abovementioned process had rather a short-term duration and did not have the same successful development as the beginning, however, despite this, it was the first and quite successful attempt to develop the Georgian enforcement system. After the creation of the enforcement department, several years were an age of absolute immobility for the enforcement system. Neither legislative nor organizational changes were made.[10]
Finally, in 2008, the department under the governance of the Ministry of Justice was established as a legal entity under public law - the National Bureau of Enforcement and is still operating in this form.
2. Enforcement System and Legislation of Georgia
As stated above, in Georgia, the main normative act in the field of enforcement is the Law of Georgia On Enforcement Proceedings.[11] However, because enforcement proceedings are a complex institution that combines the norms of civil, civil procedural, administrative, tax and other branches of law, accordingly, enforcement legislation will obviously not be limited only by the Law of Georgia “On Enforcement Proceedings”. The abovementioned law has been in force since 1999 and it regulates the relations regarding the compulsory execution of the acts adopted by the court and other bodies. Apart from establishing the rights and duties of the parties to the proceedings, the legal bases of the executive’s activities, the procedure for appointing and dismissing him/her, rights and duties, guarantees of social and legal protection, and others are also defined by the law.
3. National Bureau of Enforcement
The Law of Georgia “On Enforcement Proceedings” determines that the LEPL National Bureau of Law Enforcement carries out the enforcement of decisions made by courts and other authorized bodies in Georgia, which represents a Legal Entity Under Public Law under the governance of the Ministry of Justice. The Ministry of Justice of Georgia monitors the activities of the National Enforcement Bureau. The regulation of the Bureau is approved by the Minister of Justice. The appointment/dismissal of the chairman of the National Bureau of Enforcement is also within the competencies of the Minister of Justice.[12]
The National Bureau of Enforcement carries out its activities through structural units and territorial bodies - enforcement bureaus, which are located throughout the territory of Georgia according to regions. The Enforcement Bureau in each region is chaired by the head of the Bureau, who is appointed and dismissed by the chairman of the national enforcement bureau in agreement with the Minister of Justice.
Enforcement bureaus carry out their activities throughout the territory of the country in accordance with the Law of Georgia “On Enforcement Proceedings”, other normative acts and internal regulations.
In addition, the National Bureau of Enforcement includes the following structural units:
Insolvency Case Management Office
Enforcement Police
Legal Office
Economics Office
International Relations and Project Management Office
Proceedings Office
Internal Controls and Auditing Office
Assessment Office
Parties Interest Protection and Mediation Office
Logistics Office;
Simplified Case Management Department
Human Resource Development and Management Office.[13]
4. Institute of private bailiff in the Enforcement System of Georgia
According to the legislation, the authority to carry out compulsory enforcement actions is also granted to a private bailiff, in addition to the National Bureau of Enforcement in Georgia, who carries out enforcement activities based on the license issued by the National Bureau of Enforcement. The institution of the private bailiff was introduced into the Georgian enforcement legislation based on the recommendations issued by the European Union and their technical and material support.[14] However, because the said institution was completely alien to the Georgian reality, it was expected from the beginning that many flaws and shortcomings would appear in the process of its implementation. Exactly such a grounded assumption conditioned it, that to avoid expected errors, the competence of private bailiff was somewhat limited and several issues were defined, to the implementation of which private bailiff would not have access and the mentioned issues would remain only in the exclusive competence of the legal entity under public law - the National Enforcement Bureau.[15]
It should be noted that, unlike a public bailiff, a private bailiff does not have the right to perform all actions provided for by the Georgian legislation “On Enforcement Proceedings” and to accept all categories of proceedings.[16] It is this that raises the main question mark regarding how the given fact can be evaluated: Does the mentioned circumstance represent the advantage of the private bailiff and the possibility for him/her to receive additional benefits from a material point of view. It is ambiguous, which sector is in an advantageous position and from what point of view, an unequivocal approach has not been established in this regard, and arguments continue to be actively contested to this day.
A private bailiff is a natural person of a free profession, performing public authority-enforcement activities based on the legislation, and is considered an entrepreneur in matters of taxation. He/she performs his/her authority unlimitedly on the entire territory of Georgia, just like the National Bureau of Enforcement.[17]
Since its introduction, the institution of private bailiff has been very effective: Statistics revealed, that appeal by such large creditors, such as the largest financial institutions operating in Georgia, was quite high. However, despite all this, the state gradually began to impose several practical and legal barriers to the institution of a private bailiff, for example, as a result of legislative changes implemented in 2010, private bailiffs were prohibited from accepting cases of the category where the demand exceeded 500,000 GEL and many others. The abovementioned type of restrictions did not apply to public officials, and they could conduct any category of business without any restrictions.
As a result of analyzing the examples given above, it seems at first glance that the private bailiff is “less privileged” compared to the public one, since the legislator imposes different legal and practical barriers on him/her, restricts the authority to perform certain actions, however, a question arises: Which bailiff is in an advantageous position? To what degree can the “restrictions” imposed by the legislator on the private bailiff be considered a barrier? Based on the practice, it can be said, that the private bailiff has limited authority to execute those categories of cases, the proceedings of which are characterized by special difficulty (for example, alimony and eviction category cases), and those cases, which the private bailiff has the right to perform, can bring more benefits from a material point of view, than, for example, the category, which is conventionally represented: administrative fine, case of alimony category and others.
Another important factor is that, unlike the public bailiff, the private bailiff has the opportunity to decide for himself/herself even from the categories of cases listed above, in a specific case, based on the creditor’s appeal, which case he/she will accept in the proceedings and which one he/she will not, while the public bailiff, who works in the National Bureau of Enforcement, is completely deprived of this opportunity, and any category of case is automatically assigned to him/her. The public bailiff does not have the opportunity to choose which category of cases he/she will accept for execution in the proceedings and which he/she will refuse (except for the exceptions provided by law).
As for the number of cases, neither the law nor the regulations of the Bureau determine the maximum number of cases that may be assigned to one bailiff. Accordingly, in practice, such a situation arises when one public bailiff employed by the National Bureau of Enforcement has several thousand cases pending, and the public bailiff is deprived of the opportunity to request a reduction in the number of cases assigned to him/her.
Based on the abovementioned circumstances, to improve the enforcement system and refine the legislation, in 2013, the EU representative office implemented a project: DEEP-Development of Enforcement Legislation Project in Georgia. Experts invited by the European Union took part in the abovementioned project, with whose active involvement, recommendations were developed and several measures were taken to reflect the abovementioned recommendations in legislative acts and put them into practice. The main essence and purpose of the abovementioned recommendations was the maximal equalization of private and public bailiff institutions at the legislative level.
As already mentioned, the institution of the private bailiff was introduced to take into account the best practices of European countries, and the final goal was to completely reorganize the existing system in the country on the activities of private bailiffs. The overall, the existence of the abovementioned institution is primarily beneficial for the state: a stable and healthy business environment is created, competition is stimulated as much as possible, service quality increases and prices decrease. All this ultimately creates such a situation, that the state is significantly exempted from expenses and all favourable conditions for economic growth are present. All this is based on the basic principle that the state should not provide the services that the private sector can provide.
5. The Institute of the Register of Debtors as an Innovation in Georgian Enforcement Legislation
Another important and the most recent institution provided by the Law of Georgia “On Enforcement Proceedings” is the Register of Debtors. The aforementioned institution “On Enforcement Proceedings” was reflected in the Law of Georgia on July 15, 2008 and began to operate in 2010. One of the reasons for the introduction of this institution was to bring the enforcement system in the country even closer to international standards. From that period to the present day, the institute has undergone numerous changes, the procedure for its production is approved by the Minister of Justice, and the register of debtors is maintained by the National Liaison Enforcement Bureau.[18]
The main essence and purpose of the production of the register of debtors by the National Bureau of Enforcement is to increase the efficiency of enforcement and to avoid the risks that accompany the aforementioned relations. In particular, this institution creates additional guarantees for the creditor that the debtor cannot avoid the obligations imposed on him/her during the compulsory enforcement proceedings.[19]
It is important that the data of the register of debtors is public, i.e. any person has the opportunity to receive information about the entities registered in the register. Unlike, for example, the German enforcement system, which does not make public the data of the register of debtors, but only provides information if the interested person indicates the purpose of receiving the information with appropriate justification, there is no such thing in the Georgian enforcement system. Absolutely any person can identify the persons registered in the Register of Debtors without limitation and determine by whom the registration of a person was carried out in the unified database of the Register of Debtors. It should be noted that the publicity of the register is also one of the drawbacks and this issue should be regulated differently by the legislation.
A person registered in the register of debtors is limited to one of the basic rights provided by the constitution: the property right. The restriction of the abovementioned right is provided for in the Constitution of Georgia only in the presence of the following conditions:[20]
Restrictions are allowed for essential public needs and “Common Welfare”;
The restriction shall be implemented based on the law and in the manner determined by the same law.
It is necessary to observe the principle of proportionality, and this principle includes the following:
Legitimacy of the legislator\u27s goal; Effectiveness of the means to achieve the goal. If there is a less painful way to achieve the goal, then there is no need to restrict ownership.[21]
Notwithstanding the foregoing, it can be safely said that the institution of the Register of Debtors is a step forward for the Georgian enforcement system.
6. Basic Princi
საერთაშორისო სავაჭრო გარიგებების სამართლებრივი ბუნება, როგორც დოკუმენტური აკრედიტივის წარმოშობის საფუძველი
Full text linkIn the article there are discussed the meaning of international commercial deals, the history of Georgia’s trade relations with neighbor and other countries, that took place since Bronze Age started from the exchange of goods and followed by opening of the Great Silk Road. There are also discussed issues related to the Legal Regulation of International Trade according to the international law norms and national legislation. Comparative analysis is made between the national legislation and the legislations of USA, Germany and France
A critical legal analysis of commercial bank money
Full text linkBecause of the role that commercial banks play in today’s financial and banking system, this article discusses the activity of commercial banks with regards to how money (commercial bank money) is created. By exploring the nature of the fractional reserve banking system, this article establishes that commercial banks are not mere financial intermediaries, but rather exclusive money creator. A critical legal analysis of this money creation process concludes, with solid supporting arguments, that commercial bank money is riddled with legal violations and harmful socioeconomic effects, which are inevitably borne by the individual and society in the form of ‘privatizing the profits of money creation’ and ‘socializing the losses and its outrageous financial burden’.
Keywords: Commercial banks; Commercial bank money; Fractional reserve banking; Legal Analysis; Money creation
Introduction
The fact that things are scarce everywhere is, for us as humans, the most fundamental economic reality of our existence. We don\u27t have enough resources to accomplish all of our goals. Time is limited, and so are all other available resources. This compels us to carefully and wisely choose how to use (or not use) these resources. The use of all means of action is basically governed by the law of diminishing marginal value, which stipulates that the marginal value (relative importance) of any unit of an economic good for its owner decreases with the control and acquisition of a greater overall supply of this good, and vice versa. For example, the marginal value of a sip of water (additional) is very different for a person stranded in a desert than for the same person diving and swimming in a lake. Therefore, the creation (production) of additional units of money makes money less valuable for the owners of these additional units, especially when compared to all other goods and services. Consequently, buyers of goods and services will tend to pay more in exchange for these goods and services; in turn, sellers of these goods and services will tend to demand higher money compensations. In short, money generation results in a propensity for prices to rise, even though this may occur gradually over time in a process that has a varied impact on each price.
To legally analyze the process of money creation in today’s banking system, this article first explores the role of commercial banks by providing evidence pointing to the fact that commercial banks are not financial intermediaries but rather (de facto) private entities with an exclusive right (privilege) to create money out of thin air. The article adopts a descriptive-analytical approach to explore the nature of commercial bank money under fractional reserve banking as it builds its arguments and portrayal of the fractional reserve system on previous empirical research backed with assertions of experts and practitioners in the field of finance and banking. After that, the research paper delves into the discussion with a critical analysis of this money creation or production process from different legal perspectives. The article concludes, with irrefutable supporting arguments, that commercial bank money is blatantly harmful to the individual and society, with many legal violations at its core.
Some of the most influential and pertinent previous research on the subject came from Huerta de Soto[1] (2006) and Hulsmann[2] (2008); they both offer comprehensive analysis in their legal examination of the fractional reserve banking system, Bagus & Howden, (2010[3], 2011[4]) contributed to the subject by arguing against free banking as it is conceptualized by the likes of Selgin[5] (1988), who in turn responded to their arguments (2011) with his rebuttal[6] (article). My article builds and expands on the works mentioned above by delving, with new perspectives and arguments, deeper into the nature of this process of money creation by commercial banks to expose its inherent socio-economic and legal harms and defects that essentially constitute blatant violations of the legal framework.1. What is money? And how is it created (commercial bank deposit money)?
Most attempts to define money focused on its functions. It is anything that is generally accepted by law in the fulfillment of obligations and is used as an intermediary in the exchange, as a unit of account, as a store of value, and as a tool for settling deferred or future payments. Scitovsky argues that money “is a difficult concept to define, partly because it fulfills not one but three functions, each of them providing a criterion of moneyness … those of a unit of account, a medium of exchange, and a store of value”.[7] Standard textbooks define money as any medium that is commonly considered to have the following three properties: (1) store of value, which allows money holders to conserve purchasing power over time; (2) unit of account, which serves as a reference in which the value of goods and services is measured; and (3) medium of exchange, which makes it ideal to settle transactions.[8]
For this research, I will include the definition of the form of money that this paper’s discussion part will revolve around; commercial bank money (deposit money). The portion of the total money stock held by non-bank agents in the form of electronic bank deposits is what we call commercial bank money. While keeping system-wide money stocks constant, bank customers (commercial bank money holders) turn their commercial bank money into physical cash back and forth (similar to transferring funds electronically across banks). So when banks lend money (granting a loan), they create a deposit (money). Therefore, lending adds to the bank’s total money stocks, while loan repayments destroy its total money stocks accordingly. In contrast, non-bank lending refers to a transfer of (already) existing legal money stocks from one economic agent to another. Hence, through a debt, one economic agent subtracts from its money holding and adds to another’s.[9]
First, I must briefly tackle Fractional Reserve Banking, as it is an essential component of all today’s modern economies. The practice of lending out most, but not all, of the deposits held by bankers (institutions) was first developed in Europe in the 16th century and has been followed ever since. To protect the bank in the event that many or all of its depositors demanded cash at the same time, the practice of holding a fraction in reserve was initially instituted. Fractional reserve banking allows banks to “create money” through lending, thus increasing the money supply during periods of economic expansion and growth, whether it is mandated by caution or a system of banking regulations. The majority of economics textbooks assert that banks “create” money. ”Eighty percent of the bank deposits are loaned out, but they’re still considered as being ‘in the bank”.[10]
Throughout the era of gold trading, Goldsmiths observed that not everyone demanded their deposits simultaneously, which essentially opened the door for fractional banking to exist. People received promissory notes whenever they deposited their silver and gold coins at goldsmiths. Later, the notes were recognized as a valid medium of exchange, and their owners used them in commercial transactions. The goldsmiths understood that not every saver/depositor would withdraw his deposits at the same time because depositors used the notes directly in trade. Therefore, goldsmiths started issuing loans and bills with high interest rates along with the storage fee they were charging the deposits. Eventually, the goldsmiths turned from being safe-keepers of valuables to interest-paying and interest-earning banks. Later, history revealed that whenever the note-holders lost faith in the goldsmiths, they would withdraw all their deposits simultaneously, leaving the bank (goldsmith) insolvent due to the lack of reserves to support the mass withdrawals. This prompted governments to develop laws to establish a central institution (agency) to control and regulate the banking industry. In this regard, Sweden established the first central bank in 1668, and the rest of the world followed. Central banks became in charge of regulating commercial banks, setting reserve requirements, and, more importantly, they became the lender of last resort to any commercial bank affected by banks runs.[11]
Professor Salerno testified before the U.S. house of representatives and had this to say when asked about fractional reserve banking: “Fractional reserve banking occurs when the bank lends or invests some of its deposits payable on demand and retains only a fraction in cash reserves, hence the name “fractional reserve banking”. All U.S. banks today engage in fractional reserve banking.”[12] Similarly, Professor Cochran stated, “Fractional reserve banks developed from two separate business activities: banks of deposit, or warehouse banking, where banks offering transaction service for a fee; and banks of circulation or financial intermediaries. Circulation banking, if clearly separated from deposit banking, reduces transaction costs and enhances the efficiency of capital markets, leading to more savings, investment, and economic growth. Fractional reserve banking combined these two types of banking institutions into one: a single institution offering both transaction services and intermediation services. With the development of fractional reserve banking, money creation--either through note issue or deposit expansion--and credit creation became institutionally linked. Banks create credit if credit is granted out of funds especially created for this purpose. As a loan is granted, the bank prints bank notes or credits the depositor on account. It is a creation of credit out of nothing. Created credit is credit granted independently of any voluntary abstinence from spending by holders of money balances”.[13]
Some economics textbooks claim that commercial banks must hold only a fraction of customer deposits as reserves and may use the rest to grant loans to borrowers. However, when awarding loans, commercial banks merely accept promissory notes in exchange for credit that they deposit (digitally) in the borrower’s account. Hence, deposits to the borrower’s account, as opposed to giving loans in the form of cash or currency, are part of the process banks use to create money. Because of this, whenever a bank grants a loan, it generates new money, increasing the total amount of money in circulation. For instance, when a person takes out a $100,000 mortgage loan, the bank credits the borrower’s account with the appropriate amount rather than handing him currency or cash equal to the loan’s value.[14]
In an attempt to defend fractional reserve banking and commercial bank money, Rendahl and Freund said: “In recent years, some have claimed that banks create money ‘ex nihilo’. This column explains that banks do not create money out of thin air. From an economic viewpoint, commercial banks create private money by transforming an illiquid asset (the borrower’s future ability to repay) into a liquid one (bank deposits)”.[15] Notice how they considered ‘someone’s ability to repay in the future’ an illiquid asset, I am not going to focus on this debatable claim but rather examine how they portrayed the granting of a loan as an exchange of a borrower’s promise to pay back in the future for what they considered a liquid asset ‘bank deposits’. This begs the question: where did the bank get the liquid asset? Only three possibilities are conceivable in this context; a) prior to the borrower’s demand for the loan. The bank already had the money in its possession (bank’s liquid money – i.e. investors/savers money deposited with the bank), b) the bank created the money demanded by the borrower ‘instantly’ as soon as he approached it for the loan (computer inputs into the borrower’s deposit account) and c) the bank turned the borrower’s promise (ability) to pay in the future into an instant liquid asset (deposit money) which is exactly similar to what Rozeff[16] tried to argue in his defense of the fractional reserve banking by claiming that when banks grant loans they create new money in the form of a purchase of the borrower’s IOU in exchange of the bank\u27s IOUs, so ultimately the money in this magical context belongs to the borrower in the first place and yet the bank loaned him ‘his own future money’ with an obligation of him relinquishing the same amount of money to the bank in the future (plus interest)!! So the granted loan is basically computer inputs banks add to the borrower’s account. It is like ‘the bank’ saying I will lend you money that I don’t have (did not exist until you (the borrower) demanded it) because I have a right and privilege (by law) to create it (computer inputs) as soon as you demand it (need it). I am exchanging (trading) something that do not exist (new deposit money) for another thing that do not exist yet ‘today’, which is your ability (promise) to pay in the future. How can this not be creating money out of nothing?! Moreover, they cannot explain where did they get the liquid asset (bank deposits), as their premise would only make sense if the liquid asset they were referring to came from savings/investments (i.e., saving deposits), which in reality does not.
So are commercial banks financial intermediaries? Do they create money out of thin air? Werner[17] (2014) (2014) examined the three hypotheses (theories) that are recognized in the literature. The financial intermediation theory of banking contends that banks are simply intermediaries, gathering deposits to be lent out like other non-bank financial institutions. The fractional reserve theory of banking holds that while individual banks are merely financial intermediaries and cannot create money, they do so through systemic interaction as a group. The third theory, known as the “credit creation theory of banking,” holds that every single bank can create money “out of nothing” when it extends credit. Which of the theories is correct has significant ramifications for research and policy. Unexpectedly, no empirical study has, up until now, tested the theories, despite the ongoing controversy. Werner carried out an empirical test whereby a loan is taken (borrow money) from a cooperating bank while its internal records are being scrutinized and monitored to determine whether the bank transferred funds from other accounts—within or outside the bank—or if they were created from scratch when making the loan available to the borrower. For the first time using empirical evidence, Werner’s study proved that banks individually create money out of thin air. The banks independently create (in his own words) the “fairy dust” that serves as the money supply. According to Werner’s study, customer deposits are accounted for on the financial institution’s balance sheet. The financial intermediation theory, which contends that banks are not unique and are essentially undifferentiated from non-bank financial institutions that must keep customer deposits off the balance sheet, conflicts with the empirical evidence provided by Werner’s study. While non-bank financial institutions record customer deposits off their balance sheet, banks treat customer deposits very differently. Werner discovered that the bank treats customer deposits as a loan to the bank, which is why they are listed under the heading “claims by customers.” This concords with the legal analysis of the demand deposit (current account) I previously conducted[18] (2022). Therefore, only the credit creation theory or the fractional reserve theory of banking can reconcile and make sense of these findings.
The following statements are some valuable quotes from past and current literature:
Schumpeter (1912): “It is much more realistic to say that the banks ‘create credit’, that is, that they create deposits in their act of lending, than to say that they lend the deposits that have been entrusted to them. And the reason for insisting on this is that depositors should not be invested with the insignia of a role which they do not play. The theory to which economists clung so tenaciously makes them out to be savers when they neither save nor intend to do so; it attributes to them an influence on the ‘supply of credit’ which they do not have.”[19]
Keynes (1930): “... [a bank] may itself purchase assets, i.e. add to its investments, and pay for them in the first instance at least, by establishing a claim against itself. Or the bank may create a claim against itself in favour of a borrower, in return for his promise of subsequent reimbursement; i.e. it may make loans or advances.”[20]
Minsky (1986): “Money is unique in that it is created in the act of financing by a bank and is destroyed as the commitments on debt instruments owned by banks are fulfilled. Because money is created and destroyed in the normal course of business, the amount outstanding is responsive to the demand for financing. [.] Banking is not money lending; to lend, a money lender must have money. The fundamental banking activity is accepting, that is, guaranteeing that some party is creditworthy. [...] When a banker vouches for creditworthiness or authorizes the drawing of checks, he need not have uncommitted funds on hand. He would be a poor banker if he had idle funds on hand for any substantial time. In lieu of holding non-income-earning funds, a banker has access to funds. Banks make financing commitments because they can operate in financial markets to acquire funds as needed; to so operate, they hold assets that are negotiable in markets and hold credit lines at other banks.”[21]
Berry et al. (2007): (The Bank of England Quarterly Bulletin): “When banks make loans, they create additional deposits for those that have borrowed the money.”[22]
Constâncio (2011): (Vice President, the European Central Bank, 2010-18): “It is argued by some that financial institutions would be free to instantly transform their loans from the central bank into credit to the non-financial sector. This fits into the old theoretical view about the credit multiplier according to which the sequence of money creation goes from the primary liquidity created by central banks to total money supply created by banks via their credit decisions. In reality the sequence works more in the opposite direction with banks taking first their credit decisions and then looking for the necessary funding and reserves of central bank money.”[23]
King (2012): (Governor, the Bank of England, and Chairman, the Monetary Policy Committee, 2003-13): “When banks extend loans to their customers, they create money by crediting their customers’ accounts.”[24]
Turner (2013): (Chairman, Financial Services Authority, UK, 2008-13): “Banks do not, as too many textbooks still suggest, take deposits of existing money from savers and lend it out to borrowers: they create credit and money ex nihilo - extending a loan to the borrower and simultaneously crediting the borrower’s money account. That creates, for the borrower and thus for real economy agents in total, a matching liability and asset, producing, at least initially, no increase in real net worth. But because the tenor of the loan is longer than the tenor of the deposit - because there is maturity transformation - an effective increase in nominal spending power has been created.”[25]
Bank of England (2014): “One common misconception is that banks act simply as intermediaries, lending out the deposits that savers place with them… rather than banks lending out deposits that are placed with them, the act of lending creates deposits — the reverse of the sequence typically described in textbooks… Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.”[26] So the Bank of England has come forward clearly in support of the credit creation theory.
Bundesbank (2017): “Bank loans to non-banks are the most important money-creating transaction in terms of quantity…long-term observations have found that lending is the most significant factor propelling monetary growth.”[27]
2. The legal analysis
After establishing that banks are not financial intermediaries by putting forward irrefutable economic arguments and empirical evidence asserting that they do create money (out of thin air) in reality, let us delve into the interlocked socioeconomic and legal aspects of these findings. The legal doctrines that support and justify fractional reserve banking have not been founded on previously established legal precepts that gave rise to specific legal acts. Instead, they have been drafted and set ex post facto. It was crucial for the banks and their advocates to find sufficient legal grounds to preserve the network of vested interests that fractional-reserve banking generates “for them” overall.[28]
First, the acts of using depositors’ money and/or issuing deposit receipts for a greater amount than is deposited share a common trait with all other illegal acts of misappropriation, which have always been the focus of doctrinal analysis by criminal law specialists. Because of this, the similarities between the two sets of actions are so striking that theorists could not remain unmoved by this legal inconsistency. Unsurprisingly, significant efforts have been made to justify what is utterly unjustifiable: to make it acceptable and legal from the perspective of general legal principles to misappropriate funds deposited for safekeeping and to issue ‘unbacked’ deposit receipts without having the corresponding deposited money in reserves. There are two main categories of doctrinal justifications for using a fractional reserve in a demand deposit (current account). The first group sought to
FIELD OF APPLICATION OF ALGERIAN COMPETITION LAW TO INTERNATIONAL DISTRIBUTION CONTRACTS: (Model Trade Concession Contract)
Full text linkThe astonishing expansion of the global market and its trend towards globalization and the spread of international contracts have led to the emergence of international distribution channels aimed at achieving economic development and, thus, to the need for the Algerian market to integrate with these economic developments by creating an economic environment commensurate with these contracts considering free competition.
The franchise contract is one of the international distribution contracts that contribute significantly to the development of developing countries by expanding the spread of major brands across the world, but these contracts are subject to some competitive legal conditions to avoid competition in the market.
Through this study, we will learn about the concept and types of commercial concession contract and the scope of application of the provisions of the Algerian competition law to it.
Keywords: Competition, Market, Distribution, Concession contract.
Introduction
Distribution occupies an essential place in international economic exchanges, as it contributes to the promotion and delivery of goods or services to consumers around the world, so distribution contracts are a marketing tool aimed at improving communication between a particular product and its potential buyer.[1] Distribution appears as a stage of economic activity between production and consumption.
Distribution is “the process of delivering products to the final consumer, through a group of institutions. It is considered one of the main marketing functions and aims to deliver goods after completion of production to the last consumer, and the routes they take from producer to consumer or user are called distribution networks.”[2]
Franchise contracts are one of the most prominent international contracts that have contributed significantly to economic development in developing countries, spreading major brands across the world and benefiting consumers from them. However, such contracts may constitute restrictive practices of competition when abused and may include advantages for the producer regulating the network, while harming the economic situation of the distributor of this network. While this method allows producers to follow a comprehensive trade policy, exercise control over their products despite the multiplicity of their sales centers in the market and ensure a harmonious service to consumers, distributors are in a subordinate position towards the producer and are forced to respect the contractual terms imposed on them by the producer and are forced to respect the contractual conditions imposed on them by it. Most legislations, therefore, regulate competition rules applicable to such contracts to avoid producer abuse and to maintain the good conduct of competition.
The importance of this study lies in the spread of commercial franchise contracts significantly at present and their effective role in contributing to the economic progress of developing countries, in addition to the interest of most legislation, including Algerian legislation, in the application of competitive legal provisions commensurate with the economic value of these contracts.
This study aims to define the concept of franchise contracts with their types, and highlight the role of Algerian competition law in regulating these contracts to maintain free competition and the good functioning of the market.
Based on the above, we can raise the following problem: How effective are the provisions of the Algerian competition law in regulating franchise contracts?
To answer this problem, we will discuss in the first axis of this study the concept of commercial franchise contracts and their types, while in the second axis, we will learn about the field of application of Algerian competition law to these contracts, following the comparative analytical approach.
1. The Concept of the Commercial Franchise Contract and its Types
There are many concepts of the franchise contract and its types, and it is worth defining the concept of the commercial franchise contract before identifying its different types.
1.1. The Concept of the Franchise Contract
A franchise contract is an agreement through which the owner of a particular mark is granted the right to use the latter by an independent economic agent. The mark means “the distinctive feature that the merchant places on the products he manufactures, which is a factory mark, to distinguish them from other similar products offered on the market.”[3] The jurisprudence also defines the concession contract[4] as “a contractual means of cooperation among independent projects, which depend on the transfer of technical and commercial knowledge and associated intellectual and industrial property rights, and technical assistance from the donor to the recipient who exercises his activity in accordance with the standards and conditions of The donor places them in exchange for material performances of the latter, to replicate the success achieved by the donor in his business.”
Another aspect of jurisprudence defines it as an agreement through which the producer undertakes to put in the possession of the distributor[5] a trade name or mark that ensures its exploitation in the best conditions. Some argue that it is a distribution contract that combines an enterprise with a mark or logo with one or more independent traders.[6]
Hence, the benefits of the franchise contract are evident to us, as the supplier benefits from the latter by expanding the geographical scope of the Muntaja mark due to its reuse in other geographical areas, and the distributor obtains expertise and skills while maintaining his independence, and the consumer in turn benefits from the quality of the product.[7]
Although the franchise contract is similar to the selective distribution contract through the desire to unify the conditions for marketing a high-quality product or service and expand the spread of major brands across different countries of the world, it differs from it in that the supplier does not select its network members within the scope of the franchise contract according to specific criteria, but this agreement assumes that the supplier has sufficient skill before establishing his network to exploit it by distributors.[8]
The franchise contract is based on an essential criterion, which is the transfer of “skill”, and the latter is defined as a set of practical knowledge that is, transferable, not immediately accessible to the public, unlicensed and granted to those who are fluent in this group a competitive advantage.[9] Skill is defined in European legislation as a confidential, substantial and identical collection of unauthorized practical information, resulting from and tested by the supplier.[10]
The exploitation of the mark is permitted through the “trademark exploitation license”, which is defined as “the contract by which the owner of the mark agrees to grant third parties the right to exploit it in whole or in part, exclusively or not, in exchange for payment of an appropriate exploitation fee called royalties.”[11]
As for the legal definition of a franchise contract, it is not contained in Algerian law, but the Algerian legislator deals with the provisions of marks in general by Ordinance No. 03-06 on trademarks[12] without referring to the contracts contained in the marks as well as the legal obligations arising from there.
We point out that the commercial concession contract must be distinguished from the commercial license contract, despite the similarity of the concession contract and the licensing contract in the goal of enabling the licensee to market the products of the owner of the mark through the distribution contract, but the commercial license contract is unique in exploiting the mark without the rest of the elements of industrial property,[13] while the commercial concession contract includes, in addition to the exploitation of the mark, the exploitation of the rest of the industrial property rights, the transfer of technical knowledge and the provision of technical and technical assistance by the[14] grantor.
1.2. Types of Franchise Contract
The franchise contract is characterized by the flexibility of its legal system and its easy application to various products and services. It is divided into three categories: service concession contract, production concession contract and distribution concession contract.
1.2.1. Service Concession Contract
This contract aims to supply services bearing a certain mark, through which the licensee is allowed to market certain services under the brand of their owner but to follow the same commercial policy followed by the latter. Such as services that carry a famous mark in the field of hospitality.[15]
1.2.1.1. Production Concession Contract
This contract aims to expand the distribution of the product, but it is considered this type of service concession because it is not only commercial technology but also manufacturing technology, thus a complete activity. Such as the owner of the mark builds a factory,[16] but the licensee sponsors it, through his permanent technical presence and by marketing the products he manufactures after obtaining a license to exploit the mark.[17] One of the most important advantages resulting from this system is to bring the place of production closer to the places of sale.
The product concession contract applies to large enterprises, for which this agreement is the only means of exporting products, and what constitutes international commercial operations.[18] It should be noted, however, that the activity of the licensee in this case is not considered a branch of the trademark grantor, but rather an independent business or project under the licensed trade name, but it is characterized by complete symmetry between the brain units damaged in different regions despite the multiplicity of licensees.[19]
Therefore, the licensee, in this case, is considered a production institution on the one hand and a market on the other, and therefore, this duplication of activity is the main reason for the lack of this system due to its complex features.
1.2.2.2. Distribution Concession Contract
Through this contract, a product or group of products under a certain label is supplied, and this is the system in force. The licensees in this agreement form vertical structures that allow the circulation of the product from production to consumption, and this system is included in the distribution networks due to the commitment of the institution concerned to ensure the distribution of the product to the final consumer.
2. The Field of Application of Competition Law to the Commercial Franchise Contract
Despite the importance of franchise contracts of all kinds in achieving economic development and enabling consumers around the world to acquire products and services from major brands, they may affect the integrity of competition through some arbitrary clauses towards distributors that the grantor may include in the contract, which requires the prohibition of such actions in the competition law, but the flexibility of competition rules has led to the application of some exceptions to this prohibition.
We will first learn about the prohibitions of the franchise contract in competition law and then address the exceptions to this prohibition.
2.1. Cases of Prohibition of the Franchise Contract in the Competition Law
Traditionally, in franchise contracts, some clauses are included, such as regional exclusivity and non-competition, and this is reflected in the protection of both the grantor and the recipient of his rights and the way these rights are exercised.
2.1.1. Regional Exclusivity
The terms of exclusivity are one of the most controversial conditions in legal thought because of their impact on the freedom of trade exchange between the different parties, and in what is considered, according to the liberal commercial thought, a restriction on freedom of trade and a reason for monopoly and market division, especially when it comes to the absolute territorial limitation clause through which the licensee is obligated not to market the product of the owner of the mark except in the territory specified by the latter, so we are in the process of restricting competition.[20]
This clause may limit the freedom of the trademark holder when it comes to the latter\u27s obligation not to conclude similar agreements in the same geographical area specified for the licensee, thus ensuring that the latter is excluded from the exploitation of the same mark by another enterprise. The clause may also aim to restrict the licensee\u27s freedom when the licensee commits not to deal with other suppliers.
It should be noted that within the framework of a network, the trademark holder may impose on its members the sharing of the market among themselves and the need for them to respect these limits or prevent them from making advertisements outside the specified geographical area, which may impede competition among them.[21] However, the trademark holder can impose an exclusive obligation on the licensee only for skill-related products where such obligation is necessary for their application.[22]
The franchise contract can also appear as a restrictive practice of competition by infringing on the freedom of the parties, especially when it comes to the need for the licensee to respect the prices set by the owner of the mark and the need to follow his commercial policy.[23] Such agreements focusing on the imposition of prices by the trademark owner were first addressed by European law authorities in 1986, when the Court of Justice of the European Union showed its desire to avoid preventing licensees from competing among themselves by freely setting prices without the influence of the trademark holder. The European judge considered that the price fixing applied by the owner of the mark constituted a prohibited practice because it restricted the freedom of licensees and, thus, competition.[24]
The means of control granted to the trademark holder vis-à-vis the licensee may also become a tool that restricts the freedom of network members to set prices since the licensee is obliged to follow the instructions of the trademark holder.[25]
The Algerian legislator has prohibited exclusive contracts under Article 06 of Act No. 08-12, amending and supplementing Ordinance No. 03-03 on competition, which stipulates[26] that: “It is considered an obstruction, limitation or breach of the freedom of competition, and prohibits any act and/or contract, whatever its nature and subject matter, that allows an enterprise to monopolize the exercise of an activity within the scope of application of this order.”
While European law defined exclusive distribution as any direct or indirect obligation imposed on a supplier to sell its products or services specified in the contract to a distributor located within the European Union, the[27] EC Court confirmed that exclusivity agreements that produce weak effects on competition are not included in the prohibition.[28]
Thus, exclusive distribution consists of the supplier\u27s acceptance of the sale of a product to a certain category of distributors to resell it in a particular territory and for a certain period, and at the same time, the distributors are obliged to respect these terms, and the restriction of freedom is manifested by the obligation of the producer to supply his products to certain distributors only.
Therefore, the franchise contract constitutes a vertical restriction of competition due to its contribution to reducing the chances of new competitors to entering the market or maintaining their competitive position through the restrictive supply clauses they need to ensure effective competition in the market.[29]
Accordingly, it is required that the exclusivity be specific in terms of time and place, as the condition of a complete minority is considered a prohibited condition due to its restriction of competition, and if the commercial concession contract includes such a condition, the Competition Council can intervene in this case to take the necessary measures to put an end to this prohibited act.
2.1.2. Non-Competition Clause
The non-competition clause is a provision through which one of the contracting parties undertakes not to practice a professional activity competing with the other party, so the obligor is considered in the position of the debtor,[30] and his obligation is to refrain from performing an act, which is to compete with the other party who is in the position of a creditor.[31] Thus, the limitation of the freedom of the competitor lies in preventing him from practicing a certain activity through this clause. Some jurisprudence argues that the non-competition clause leads to the contractual exclusion of the risk of competition, as the supplier resorts to this method to exclude competition risks from the market[32] .
We point out that the owner of the mark has the right to include the non-competition clause to protect his economic interest, but this must be in accordance with legal conditions, as the clause should not lead to the prohibition of every activity, but only the activity related to that practiced by the beneficiary of the item.[33] The acts prohibited to the debtor must be clearly and accurately defined, and in case of ambiguity, the judge must interpret the clause.
The item must also relate to a specific time and place. The validity of a non-compete clause is usually set at 5 or 10 years, and in case of non-compliance with the period, it is either reduced or the clause or contract is invalidated.[34]
2.2. Exceptions to the Prohibition of the Franchise Contract in the Competition Law
The Algerian legislator mentioned some cases in which anti-competitive practices in general are excluded from the ban to avoid freezing the competition law by prohibiting all practices without exception, which leads to the fear of economic customers from invading the market world and their sufficiency with certain practices, which in turn hinders the development of competition.
It also considers an important element of the general economic interest, as exceptional situations appear as a means of achieving economic development when these restrictions coincide with the public interest.
Article 09 of Ordinance No. 03-03 on competition stipulates that the prohibition does not apply to: “...Conventions and practices resulting from the application of a legislative or regulatory text adopted in the application thereof. Authorize agreements and practices whose owners can prove to lead to economic or technical development, contribute to improved employment, or allow SMEs to enhance their competitive position in the market. Only agreements and practices that have been authorized by the Competition Council shall benefit from this provision.”
We note from the extrapolation of the text of the article that the Algerian legislator considers the economic progress resulting from the restrictive practice of competition as the effects resulting from these actions may be a means of regulating economic activity, thus obtaining appropriate economic or technical effects.
Although the Algerian legislator does not address a clear concept of economic progress, the latter can be deduced through the results of the economic efficiency expected from the practice, and it is related to the possibility that a restrictive practice of competition can contain positive results, which can manifest itself in various forms, such as improving production through the prohibited practice as a result of the enterprises concerned manufacturing high-quality products at low costs, or by applying how to produce environmentally friendly[35] products. Economic progress is also achieved through improved market conditions when the prohibited practice ensures the optimal spread of products or services and, thus, the speed of circulation among consumers.
Economic budgeting is a mean by which it is possible to determine whether a practice is beneficial or harmful by preparing a list of negative effects on the one hand and positive effects on the other,[36] as it fulfills the condition of contributing to economic progress when the restrictive practice allows for the renewal of the effectiveness of the market that affects it for the benefit of the parties to the practice on the one hand and the rest of the economic customers and the end consumer on the other.[37]
In application of the provisions of the article on the commercial concession contract, it is allowed to conclude commercial franchise contracts that restrict competition if they contribute to economic progress, thus benefiting from the exemption regime provided for in article 09 of Ordinance No. 03-03 in view of their positive effects on competition in the relevant market.
The Algerian government has concluded a partnership contract with the French company Renault to establish a tourist car factory exclusively in the city of Oran, which led to the discontent of the European Union countries, due to the conflict of the exclusive concession granted to the French company with the provisions of the Association Agreement concluded between Algeria and the European Union, especially with Article 41 thereof, which enshrines the principle of fair competition and the prevention of exclusivity and monopoly.[38]
It is noteworthy that the exclusive distribution agreement concluded between the Algerian government and the French company Renault constitutes a violation of article 06 of Law No. 08-12, which prohibits any exclusive agreement of any nature. However, the president of the Algerian Competition Council stated that the partnership agreement[39] with France\u27s Ren
EVOLUTION OF PARLIAMENTARY IMMUNITY AND PRIVILEGES
Full text linkThe evolution of parliamentary immunity and privilege is a fascinating subject that reflects the development and transformation of democratic governance. This article provides an overview of the historical progression and key aspects of parliamentary immunity and privilege, highlighting their significance in protecting legislative independence and fostering democratic debate. Parliamentary immunity gives a legal protection to the members of parliament from being held accountable or prosecuted for their speeches or actions in the course of their parliamentary duties. The idea of “parliamentary privilege” is another one that embraces the notion of “popular sovereignty,” emphasising that lawmakers are the representatives of the will of the people. In many democracies, the scope of immunity has been refined to prevent abuse and maintain public trust. Additionally, courts have played a crucial role in interpreting and defining the limits of parliamentary privilege, striking a balance between the need for robust debate and accountability.
Keywords: Live-in-relationship, Cohabitation, Civilisation, Succession, Inheritance, Agreement, Sapinda
Introduction
“Live-in relationship” refers to an arrangement of staying together as a partner in a home for a long period without getting married. In this arrangement, an unmarried partner cohabitates in such a manner that it resembles marriage without formally getting married. The traditional obligations of married life are not forced upon the people living together in this type of partnership. Individual freedom is the cornerstone of a live-in relationship. Many countries all over the world have adopted the concept of relationships. An arrangement where two persons live together without being married with their agreement is no longer illegal. “Live-in relationships” are not a novel idea; they have developed with human civilisation. “Live-in relationships” were more common before the concept of marriage. There were no weddings in the time before civilisation. Traditionally, people, especially men and women, lived in close quarters. The people did not have any regard in relation to “sapinda marriages”, and they were not concerned about the taboos associated with it. The institution of marriage was established in order to prevent disorder, confusion, and conflict in human relationships, to legalise cohabitation, and to gain social approval. The institution of marriage also has legal power because nearly every country in the world has passed laws regulating it. Indian culture regards marriage as sacred. Along with bringing two people together, it also brings two families together with diverse norms. Therefore, marriage is the greatest status institution in our society. The Supreme Court repeatedly reaffirmed that it is part of an individual’s right to life to live with each other if they are in love.[1]
The Commission[2] suggested to the “Ministry of Women and Child Development” that the definition of “wife”, as established in section 125 of the Cr.P.C, should be expanded to include women living together. The recommendation sought to equalise the status of a “live-in relationship” couple as a legally recognised marriage and harmonise the legal rules for protecting women from domestic abuse. Because of this, the SC established the “Justice Malimath Committee”, which stated that “if a man and a woman are living together as husband and wife for a reasonable period of time, the male shall be judged to have married the woman.”
The Committee[3] recommended that the definition of “wife”, which is given in Cr.P.C, should also be amended and include women living in a “live-in relationship” so that the women can receive alimony in the case of domestic abuse. The SC held that in order to qualify for maintenance, there is no need to get married under section 125 of the Cr.P.C formally. The women living in “live-in relationships” are eligible for the demand of maintenance.
Concept of Marriage and Live-in Relationship
The concept of marriage in India has been seen as a sacred institution from the very beginning. Traditionally it is built around dedication and tolerance and includes “the coupling of two people possessing different desires, interests and needs, is a special association given shape by social rules, and laws and significantly affects individuals’ development and self-realisation.”[4] Marriage as a concept has evolved over time. After the formal ceremony, marriage is typically regarded as one of the fundamental civil rights. It has legal implications and implies several duties and obligations with regard to succession, property inheritance, and other concerns. Marriage thus encompasses all of the legal criteria related to tradition, selection and exposure, as well as all of the legal outcomes that follow from such a union.
As we know that change is the rule of nature, and commitment has changed with the times. Now people are looking into alternatives to marriage. A “live-in relationship” is a voluntary arrangement where two adults agree to live together for a long-term relationship, which resembles a marriage.[5] If we compare it with other countries, a “live-in relationship” is still not socially acceptable in India.
In this growing society, people want to believe in order to long-term conjugal relationships but are not interested in the marital knot and choosing an alternate institution like a “live-in relationship.” Basically, it is the result of the continual improvement of society and the intricate nature of marriage. “Live-in relationships” are “walk-in, walk-out relationships.” In such kinds of relationships, people do not have any legal obligation, and there are no strings attached between them. It is, in simple words, cohabitation.[6] We can also refer to this relationship as a way of living a life wherein unmarried couples reside with each other in a home in order to maintain a long-term relationship that will eventually lead to marriage.The Legality of Live-in Relationship
No particular law in India acknowledges “live-in relationships.” Therefore, it is very clear that there is no legal definition of it, and it does not determine the rights and responsibilities of the parties as well as the status of any children born to such marriages. No Indian law, including the Hindu Marriage Act of 1955,[7] recognises a “live-in relationship.” The “Supreme Court of India” has held in many decisions that if two major persons (a man and woman) live together for a long period and procreate, the courts will assume they are married. They and their relationship would be subject to the same laws as are applicable to Indian marriages. Under Article 21 of the Constitution of India, living together with two major persons is a part of the right to life. The courts have explained the legal status of the “live-in relationship” in several cases and further held that it cannot be a criminal act.
In the case of A. Dinohamy v. W.L.Blahamy,[8] the “Privy Council” observed that if it is proved that two major persons are living together for a long period of time, it is a presumption of the law unless the contrary is proved beyond doubt that they were residing together in consequence of a valid legal marriage, and not in a state of concubinage. In Lata Singh v. State of U.P.,[9] the court observed that even though the concept of a “live-in relationship” is considered immoral in society’s eyes, consenting adults of the opposite sex is not illegal in the eye of the law. In the case of Badri Prasad v. Deputy Director of Consolidation[10] Supreme Court held that few would be successful if a man and woman who are legally married and live as husband and wife had to demonstrate through eyewitness testimony that they were legally married fifty years back. Where the couples have cohabited for a considerable period as husband and wife, then there is a strong presumption in favour of marriage. Although the presumption can be rebutted, the burden of proof is on that person who wants to deprive the legal foundation of such a relationship. In the case of SPS Balasubramanian v. Suruttayan[11] Court reiterated the observation made in the Badri Prasad case along with the observation that observed that their children would be entitled to inherit the property of a parent, born to such a “live-in relationship.” In a landmark case of Indra Sarma v. VKV, Sarma[12] Supreme Court held that if both parties are unmarried and enter into a “live-in relationship” and several types of implications were examined, it does not fall under any offences.
In Joseph Shine v. Union of India, India,[13] case SC held that sec. 497 of the IPC is unconstitutional because this section was based on gender discrimination and violates Articles 14 (treating men and women unfairly) and 15 (discrimination on the ground of sex) of the Indian Constitution. However, adultery is no longer a crime but still could be grounds for divorce under civil law. In the same way, the apex court pronounced that Section 377 of the IPC is partially unconstitutional in Navtej Singh Johar v. Union of India[14] case and further said that it is not only unconstitutional but also irrational, indefensible and arbitrary and violating Articles 14, 15, 19, and 21 of the Constitution of India. Section 377 continues to apply to sexual acts committed against minors, bestial acts, and non-consensual actions between two adults. Despite the legalisation of consensual gay behaviour, executing a symbolic same-sex marriage is not against the law, but same-sex marriages have still not been acknowledged in India.
In the case of D. Velusamy and D. Patchaimal,[15] the apex Court established specific guidelines for recognising the nature of marriage in relation to “live-in relationships.”
To the public, the couple must present themselves as
The couple must be of legal marriageable
In order to be able to marry legally, they must not already be
They had to have lived together freely and presented themselves to others for a considerable time as being close to
In S. Vahini v. Union of India and Others,[16] the SC held that choice-making is fundamental to liberty and dignity. The court determined that articles 19 and 21 of the Constitution guarantee an individual’s choice as a vital part of their dignity and freedom. Further, once a right was recognised, it was the duty of the state as well as the courts to enforce and protect that right. Further, in Nandakumar and others v. State of Kerala,[17] the court ruled that “live-in relationships” are now established by the Legislature and given such provisions to protect such relationships through the “Protection of Women from Domestic Violence Act, 2005.”
The Constitutional Court, in a writ, held that even if it may or may not be acceptable to conventional sections of society but it is the fundamental duty of the Court is duty bound to protect and respect the basic right of a major to have a “live-in relationship.”[18] In this petition, a father of a 19-year-old girl filed a petition to prevent her from living with an 18-year-old boy. The writ petition was dismissed by the Court, which held that the girl has the right to live with the boy and even can marry him after getting the age of marriage.[19]
The “Supreme Court of India” in the case Indra Sarma v. VKV Sarma,[20] determined that if the appellant knew the fact that the respondent was already married, he could not have entered into a “live-in relationship” as in the nature of marriage because the essential characteristics of a marriage like inherent, maintenance etc. could not be fulfilled. Sections 494 and 495 of the Indian Penal Code strictly prohibit and even punish every marriage that takes place while a person is still legally married to their spouse unless expressly permitted by that person’s personal law. Because it is specifically against the law, a “live-in relationship” between a married man and a married woman cannot be regarded as being in the nature of marriage. Children born from such a relationship, though not considered legitimate.
Legal Status of Children
Under Hindu law, as a coparcener, it is very clear that children born into a “live-in relationship” are only eligible to claim the property in the parent’s independently acquired property, not from joint family properties. The SC, in the case of Tulsa v. Durghatiya,[21] observed that children born out of such a relationship would be considered legitimate. The essential precondition for such legitimacy is that the parents must be sincere towards their relationship, sharing of home, and it cohabit for a long period.
The question of the legitimacy of children born out of a “live-in relationship” was first highlighted in the case of S.P.S. Balasubramanyam v. Suruttayan.[22] In this case, the SC ruled that Section 114 of the Evidence Act talks about the legal presumption under which persons live as husband and wife under a roof for a long period, and their children born out of this relationship are not illegitimate. The court further interpreted that Article 39(f)[23] directs policies toward “ensuring that children are given opportunities and facilities to develop in a healthy manner and in conditions of freedom and dignity and that childhood and youth are protected against exploitation and against moral and material abandonment.”
Property right of Partners
Section 114 of the Evidence Act discusses the presumption of certain facts under which the Court may presume live-in relationship partners as legally married couples. The onus is on the opposing party to disprove such presumption. In the Vidyadhari v. Sukhrana Bai[24] case, the court observed that partners who have been cohabitating for a reasonable amount of time are eligible to inherit one other’s property which offered hope to many live-in partners. The court determined that because the live-in male partner, in this case, was already married, the lady could not inherit the property but that the children were the rightful heirs and could therefore make an inheritance claim.
Further, in another case of Dhannulal v. Ganeshram,[25] the live-in partner and other family members spent a long period living in the same house. After the death of the male partner, a dispute of property came into existence, and the court held that if live-in partners were living together as husband and wife under the same roof with a long-term commitment towards each other were presumed to be legally married couples. Although the deceased’s property type was not mentioned in the aforementioned instance, it was simply decided that a live-in partner could only inherit another person’s property in the event of his death.
Property Right of Child
The legitimacy of a child has long been a contentious issue, and Hindu law has always regarded legitimacy as a key consideration for determining inheritance rights. A child born out of a “live-in relationship” has inheritance rights from their parents, and they must have spent a long period, as the courts have ruled this consistently. In a landmark judgement of Vidyadhari vs Sukhrana Bai,[26] the Court provided the right of inheritance and legal position to children born out of a “live-in relationship.” In Revanasiddappa Mallikarjun,[27] the “Supreme Court of India” recognised that children born out of the “live-in relationship” have legal rights in inheritance, hence approving the bequest to them. Further Court has declared that one of the essential criteria of inheritance of children born out of the “live-in relationship” is a reasonable period that the partners must spend. The Supreme Court established the legality of a child born out of a “live-in relationship” in the eyes of the law in the Bharatha Matha v. R. Vijaya Renganathan case and declared that he might be permitted to inherit the parent’s property. According to section 21 of the Hindu Adoption and Maintenance Act, children, either legitimate or illegitimate, are dependent and entitled to get maintenance from their father or from the estate of their deceased father while still a minor and while the daughter is single. If children born out of a “live-in relationship” are denied maintenance rights, this can be challenged in court because it is against the fundamental right, which is given in Chapter III of the Constitution of India.[28] This specific denial of rights is against the right to live with the dignity of the individual.Recent Judicial Pronouncements on Live-In Relationships
Recently in the case of Kaminidevi v. State of UP and others,[29] “The High Court of Allahabad” held that when two major persons, one male and one female, are living together with their free will and consent, it is the fundament right of those persons and nobody has the right to interfere with them including their parents. It is a fundamental human right and is also guaranteed under the right to life and personal liberty, further in the case where a minor girl who was living with her adult male partner Court has said that a “live-in relationship” is not acceptable by society and it is against the morality.[30] Once again, the “Punjab and Haryana High Court” refused to grant protection to a couple who were living together and said that if the protection as claimed were provided, the entire social structure of society would be upended. Therefore, there is no basis for granting the protection in the case of Ujjwal and another v. State of Haryana and others.[31]
After these judgments, in Soniya and another v. State of Haryana and others,[32] the “Punjab and Haryana High Court” granted protection to the person who was living together and observed that although the idea of living together without regard for the sanctity of marriage may not be acceptable to everyone, it cannot be said that such a relationship is unlawful or that it is a crime to do so. The court further stated that it would be “a travesty of justice” to deny protection to those who have chosen to live together outside of marriage’s sanctity.
A “live-in relationship” between a married and an unmarried person is not allowed; the “Rajasthan High Court” stated in Rashika Khandal v. the State of Rajasthan[33] case, it was stated that one requirement for such relationships was that the couple must be unmarried. In Sanjay and another v. State of Haryana and others,[34] the “Punjab and Haryana High Court” granted protections to those who were living in a “live-in relationship” and said that although the “live-in relationship” is not a new phenomenon today, society has not yet developed to the point where it can accept such a relationship without objecting. Further, in the case of Pushpa Devi and another v. State of Punjab and others,[35] while granting protection to a 21 and 19-year-old couple, the court said that two major persons are entitled to live together in a “live-in relationship”; it may be socially and morally not acceptable, but it is not against the law. In the case of Ridhima and another v. UT of Jammu &Kashmir,[36] while hearing the protection plea by a couple living together, the court observed that the “Right to exercise assertion of choice is an inseparable part of liberty and dignity of the individual.”
Conclusion
In this modern lifestyle, most youths are not prepared to accept obligations as well as engage in a whole-life committed bond, which is partially arising as a result of the rapid influence of globalisation. The acceptance of pre-nuptial agreements, broad-mindedness for sexual preferences, etc., as well as a broader knowledge of domestic living among spouses, is a new appeal for young people. They see a “live-in relationship” as one of the better options for living together, and it reduces enough complexities and problems associated with marriage. In reality, though, it requires far more responsibility and awareness of socio-legal viewpoints. In India, the view of the judiciary has a complex and non-linear view of “live-in relationships.” The judicial viewpoint is not an easy case of black or white due to the variety of legal opinions that exist at different levels of the judiciary as well as the distinct demographics. There are numerous Supreme Court decisions that support “live-in relationships”, yet there are just as many high court decisions that are critical of and even outright condemn “live-in relationships.” Since there are still no specific laws addressing “live-in relationships” that have been established by the legislature, it would seem that the generally accepted rule in such cases is that courts of law have a great deal of discretion in determining how fundamental and natural rights should be interpreted to apply in specific circumstances. However, due to the binding character of the Supreme Court of India’s decisions, consensual “live-in relationships” (subject to the age of the majority of both the party) are in themselves not prohibited by law and therefore are not illegal. In the absence of appropriate law on “live-in relationships”, the Indian Judiciary has passed several morally driven judgments. Firstly, we must establish a dividing line between morality, which is full of debates and ambiguous areas, and legality, which is essentially unambiguous. The Judge’s prime responsibility is to uphold the law of the land, not to pass new ones based on personal morality. According to Article 21 of the Indian Constitution, morality is no longer justified once a person enters a space where they have the freedom to make their own decisions and exercise their own agency, which the state has a responsibility to uphold. In order to provide live-in couples with legal protection, the Indian judicial system should consistently apply the right to privacy throughout the entirety of India. Additionally, it is advised that a “live-in relationship” be treated
LEGAL CONUNDRUM OF LIVE-IN RELATIONSHIP IN INDIA: A JUDICIAL APPROACH
Full text link The ideas of how men and women interact with one another and the attitude toward cohabitation, in general, have changed significantly with the advent of the post-modern or industrial society. “Live-in relationships” are an expression of a couple’s decision to cohabitate as a couple without getting married. The modernisation of the community has brought an array of new ideas and values. With the affection growing towards each other and the decision to tie the knot after taking into consideration all the prospects of a healthy marriage, youngsters these days believe in living together before marriage to test compatibility, known as “live-in relationships.” However, with modernisation comes the traditional thinking of our culture and the mindset of people towards these practices. Acknowledging the legal implications of the “live-in relationship” along with the challenges youngsters are facing nowadays, this paper highlights the analysis of laws that govern this practice in India.
Keywords: Live-in-relationship, Cohabitation, Civilisation, Succession, Inheritance, Agreement, Sapinda
Introduction
“Live-in relationship” refers to an arrangement of staying together as a partner in a home for a long period without getting married. In this arrangement, an unmarried partner cohabitates in such a manner that it resembles marriage without formally getting married. The traditional obligations of married life are not forced upon the people living together in this type of partnership. Individual freedom is the cornerstone of a live-in relationship. Many countries all over the world have adopted the concept of relationships. An arrangement where two persons live together without being married with their agreement is no longer illegal. “Live-in relationships” are not a novel idea; they have developed with human civilisation. “Live-in relationships” were more common before the concept of marriage. There were no weddings in the time before civilisation. Traditionally, people, especially men and women, lived in close quarters. The people did not have any regard in relation to “sapinda marriages”, and they were not concerned about the taboos associated with it. The institution of marriage was established in order to prevent disorder, confusion, and conflict in human relationships, to legalise cohabitation, and to gain social approval. The institution of marriage also has legal power because nearly every country in the world has passed laws regulating it. Indian culture regards marriage as sacred. Along with bringing two people together, it also brings two families together with diverse norms. Therefore, marriage is the greatest status institution in our society. The Supreme Court repeatedly reaffirmed that it is part of an individual’s right to life to live with each other if they are in love.[1]
The Commission[2] suggested to the “Ministry of Women and Child Development” that the definition of “wife”, as established in section 125 of the Cr.P.C, should be expanded to include women living together. The recommendation sought to equalise the status of a “live-in relationship” couple as a legally recognised marriage and harmonise the legal rules for protecting women from domestic abuse. Because of this, the SC established the “Justice Malimath Committee”, which stated that “if a man and a woman are living together as husband and wife for a reasonable period of time, the male shall be judged to have married the woman.”
The Committee[3] recommended that the definition of “wife”, which is given in Cr.P.C, should also be amended and include women living in a “live-in relationship” so that the women can receive alimony in the case of domestic abuse. The SC held that in order to qualify for maintenance, there is no need to get married under section 125 of the Cr.P.C formally. The women living in “live-in relationships” are eligible for the demand of maintenance.
Concept of Marriage and Live-in Relationship
The concept of marriage in India has been seen as a sacred institution from the very beginning. Traditionally it is built around dedication and tolerance and includes “the coupling of two people possessing different desires, interests and needs, is a special association given shape by social rules, and laws and significantly affects individuals’ development and self-realisation.”[4] Marriage as a concept has evolved over time. After the formal ceremony, marriage is typically regarded as one of the fundamental civil rights. It has legal implications and implies several duties and obligations with regard to succession, property inheritance, and other concerns. Marriage thus encompasses all of the legal criteria related to tradition, selection and exposure, as well as all of the legal outcomes that follow from such a union.
As we know that change is the rule of nature, and commitment has changed with the times. Now people are looking into alternatives to marriage. A “live-in relationship” is a voluntary arrangement where two adults agree to live together for a long-term relationship, which resembles a marriage.[5] If we compare it with other countries, a “live-in relationship” is still not socially acceptable in India.
In this growing society, people want to believe in order to long-term conjugal relationships but are not interested in the marital knot and choosing an alternate institution like a “live-in relationship.” Basically, it is the result of the continual improvement of society and the intricate nature of marriage. “Live-in relationships” are “walk-in, walk-out relationships.” In such kinds of relationships, people do not have any legal obligation, and there are no strings attached between them. It is, in simple words, cohabitation.[6] We can also refer to this relationship as a way of living a life wherein unmarried couples reside with each other in a home in order to maintain a long-term relationship that will eventually lead to marriage.
The Legality of Live-in Relationship
No particular law in India acknowledges “live-in relationships.” Therefore, it is very clear that there is no legal definition of it, and it does not determine the rights and responsibilities of the parties as well as the status of any children born to such marriages. No Indian law, including the Hindu Marriage Act of 1955,[7] recognises a “live-in relationship.” The “Supreme Court of India” has held in many decisions that if two major persons (a man and woman) live together for a long period and procreate, the courts will assume they are married. They and their relationship would be subject to the same laws as are applicable to Indian marriages. Under Article 21 of the Constitution of India, living together with two major persons is a part of the right to life. The courts have explained the legal status of the “live-in relationship” in several cases and further held that it cannot be a criminal act.
In the case of A. Dinohamy v. W.L.Blahamy,[8] the “Privy Council” observed that if it is proved that two major persons are living together for a long period of time, it is a presumption of the law unless the contrary is proved beyond doubt that they were residing together in consequence of a valid legal marriage, and not in a state of concubinage. In Lata Singh v. State of U.P.,[9] the court observed that even though the concept of a “live-in relationship” is considered immoral in society’s eyes, consenting adults of the opposite sex is not illegal in the eye of the law. In the case of Badri Prasad v. Deputy Director of Consolidation[10] Supreme Court held that few would be successful if a man and woman who are legally married and live as husband and wife had to demonstrate through eyewitness testimony that they were legally married fifty years back. Where the couples have cohabited for a considerable period as husband and wife, then there is a strong presumption in favour of marriage. Although the presumption can be rebutted, the burden of proof is on that person who wants to deprive the legal foundation of such a relationship. In the case of SPS Balasubramanian v. Suruttayan[11] Court reiterated the observation made in the Badri Prasad case along with the observation that observed that their children would be entitled to inherit the property of a parent, born to such a “live-in relationship.” In a landmark case of Indra Sarma v. VKV, Sarma[12] Supreme Court held that if both parties are unmarried and enter into a “live-in relationship” and several types of implications were examined, it does not fall under any offences.
In Joseph Shine v. Union of India,[13] case SC held that sec. 497 of the IPC is unconstitutional because this section was based on gender discrimination and violates Articles 14 (treating men and women unfairly) and 15 (discrimination on the ground of sex) of the Indian Constitution. However, adultery is no longer a crime but still could be grounds for divorce under civil law. In the same way, the apex court pronounced that Section 377 of the IPC is partially unconstitutional in Navtej Singh Johar v. Union of India[14] case and further said that it is not only unconstitutional but also irrational, indefensible and arbitrary and violating Articles 14, 15, 19, and 21 of the Constitution of India. Section 377 continues to apply to sexual acts committed against minors, bestial acts, and non-consensual actions between two adults. Despite the legalisation of consensual gay behaviour, executing a symbolic same-sex marriage is not against the law, but same-sex marriages have still not been acknowledged in India.
In the case of D. Velusamy and D. Patchaimal,[15] the apex Court established specific guidelines for recognising the nature of marriage in relation to “live-in relationships.”
To the public, the couple must present themselves as
The couple must be of legal marriageable
In order to be able to marry legally, they must not already be
They had to have lived together freely and presented themselves to others for a considerable time as being close to
In S. Vahini v. Union of India and Others,[16] the SC held that choice-making is fundamental to liberty and dignity. The court determined that articles 19 and 21 of the Constitution guarantee an individual’s choice as a vital part of their dignity and freedom. Further, once a right was recognised, it was the duty of the state as well as the courts to enforce and protect that right. Further, in Nandakumar and others v. State of Kerala,[17] the court ruled that “live-in relationships” are now established by the Legislature and given such provisions to protect such relationships through the “Protection of Women from Domestic Violence Act, 2005.”
The Constitutional Court, in a writ, held that even if it may or may not be acceptable to conventional sections of society but it is the fundamental duty of the Court is duty bound to protect and respect the basic right of a major to have a “live-in relationship.”[18] In this petition, a father of a 19-year-old girl filed a petition to prevent her from living with an 18-year-old boy. The writ petition was dismissed by the Court, which held that the girl has the right to live with the boy and even can marry him after getting the age of marriage.[19]
The “Supreme Court of India” in the case Indra Sarma v. VKV Sarma,[20] determined that if the appellant knew the fact that the respondent was already married, he could not have entered into a “live-in relationship” as in the nature of marriage because the essential characteristics of a marriage like inherent, maintenance etc. could not be fulfilled. Sections 494 and 495 of the Indian Penal Code strictly prohibit and even punish every marriage that takes place while a person is still legally married to their spouse unless expressly permitted by that person’s personal law. Because it is specifically against the law, a “live-in relationship” between a married man and a married woman cannot be regarded as being in the nature of marriage. Children born from such a relationship, though not considered legitimate.
Legal Status of Children
Under Hindu law, as a coparcener, it is very clear that children born into a “live-in relationship” are only eligible to claim the property in the parent’s independently acquired property, not from joint family properties. The SC, in the case of Tulsa v. Durghatiya,[21] observed that children born out of such a relationship would be considered legitimate. The essential precondition for such legitimacy is that the parents must be sincere towards their relationship, sharing of home, and it cohabit for a long period.
The question of the legitimacy of children born out of a “live-in relationship” was first highlighted in the case of S.P.S. Balasubramanyam v. Suruttayan.[22] In this case, the SC ruled that Section 114 of the Evidence Act talks about the legal presumption under which persons live as husband and wife under a roof for a long period, and their children born out of this relationship are not illegitimate. The court further interpreted that Article 39(f)[23] directs policies toward “ensuring that children are given opportunities and facilities to develop in a healthy manner and in conditions of freedom and dignity and that childhood and youth are protected against exploitation and against moral and material abandonment.”
Property right of Partners
Section 114 of the Evidence Act discusses the presumption of certain facts under which the Court may presume live-in relationship partners as legally married couples. The onus is on the opposing party to disprove such presumption. In the Vidyadhari v. Sukhrana Bai[24] case, the court observed that partners who have been cohabitating for a reasonable amount of time are eligible to inherit one other’s property which offered hope to many live-in partners. The court determined that because the live-in male partner, in this case, was already married, the lady could not inherit the property but that the children were the rightful heirs and could therefore make an inheritance claim.
Further, in another case of Dhannulal v. Ganeshram,[25] the live-in partner and other family members spent a long period living in the same house. After the death of the male partner, a dispute of property came into existence, and the court held that if live-in partners were living together as husband and wife under the same roof with a long-term commitment towards each other were presumed to be legally married couples. Although the deceased’s property type was not mentioned in the aforementioned instance, it was simply decided that a live-in partner could only inherit another person’s property in the event of his death.
Property Right of Child
The legitimacy of a child has long been a contentious issue, and Hindu law has always regarded legitimacy as a key consideration for determining inheritance rights. A child born out of a “live-in relationship” has inheritance rights from their parents, and they must have spent a long period, as the courts have ruled this consistently. In a landmark judgement of Vidyadhari vs Sukhrana Bai,[26] the Court provided the right of inheritance and legal position to children born out of a “live-in relationship.” In Revanasiddappa Mallikarjun,[27] the “Supreme Court of India” recognised that children born out of the “live-in relationship” have legal rights in inheritance, hence approving the bequest to them. Further Court has declared that one of the essential criteria of inheritance of children born out of the “live-in relationship” is a reasonable period that the partners must spend. The Supreme Court established the legality of a child born out of a “live-in relationship” in the eyes of the law in the Bharatha Matha v. R. Vijaya Renganathan case and declared that he might be permitted to inherit the parent’s property. According to section 21 of the Hindu Adoption and Maintenance Act, children, either legitimate or illegitimate, are dependent and entitled to get maintenance from their father or from the estate of their deceased father while still a minor and while the daughter is single. If children born out of a “live-in relationship” are denied maintenance rights, this can be challenged in court because it is against the fundamental right, which is given in Chapter III of the Constitution of India.[28] This specific denial of rights is against the right to live with the dignity of the individual.
Recent Judicial Pronouncements on Live-In Relationships
Recently in the case of Kaminidevi v. State of UP and others,[29] “The High Court of Allahabad” held that when two major persons, one male and one female, are living together with their free will and consent, it is the fundament right of those persons and nobody has the right to interfere with them including their parents. It is a fundamental human right and is also guaranteed under the right to life and personal liberty, further in the case where a minor girl who was living with her adult male partner Court has said that a “live-in relationship” is not acceptable by society and it is against the morality.[30] Once again, the “Punjab and Haryana High Court” refused to grant protection to a couple who were living together and said that if the protection as claimed were provided, the entire social structure of society would be upended. Therefore, there is no basis for granting the protection in the case of Ujjwal and another v. State of Haryana and others.[31]
After these judgments, in Soniya and another v. State of Haryana and others,[32] the “Punjab and Haryana High Court” granted protection to the person who was living together and observed that although the idea of living together without regard for the sanctity of marriage may not be acceptable to everyone, it cannot be said that such a relationship is unlawful or that it is a crime to do so. The court further stated that it would be “a travesty of justice” to deny protection to those who have chosen to live together outside of marriage’s sanctity.
A “live-in relationship” between a married and an unmarried person is not allowed; the “Rajasthan High Court” stated in Rashika Khandal v. the State of Rajasthan[33] case, it was stated that one requirement for such relationships was that the couple must be unmarried. In Sanjay and another v. State of Haryana and others,[34] the “Punjab and Haryana High Court” granted protections to those who were living in a “live-in relationship” and said that although the “live-in relationship” is not a new phenomenon today, society has not yet developed to the point where it can accept such a relationship without objecting. Further, in the case of Pushpa Devi and another v. State of Punjab and others,[35] while granting protection to a 21 and 19-year-old couple, the court said that two major persons are entitled to live together in a “live-in relationship”; it may be socially and morally not acceptable, but it is not against the law. In the case of Ridhima and another v. UT of Jammu &Kashmir,[36] while hearing the protection plea by a couple living together, the court observed that the “Right to exercise assertion of choice is an inseparable part of liberty and dignity of the individual.”
Conclusion
In this modern lifestyle, most youths are not prepared to accept obligations as well as engage in a whole-life committed bond, which is partially arising as a result of the rapid influence of globalisation. The acceptance of pre-nuptial agreements, broad-mindedness for sexual preferences, etc., as well as a broader knowledge of domestic living among spouses, is a new appeal for young people. They see a “live-in relationship” as one of the better options for living together, and it reduces enough complexities and problems associated with marriage. In reality, though, it requires far more responsibility and awareness of socio-legal viewpoints. In India, the view of the judiciary has a complex and non-linear view of “live-in relationships.” The judicial viewpoint is not an easy case of black or white due to the variety of legal opinions that exist at different levels of the judiciary as well as the distinct demographics. There are numerous Supreme Court decisions that support “live-in relationships”, yet there are just as many high court decisions that are critical of and even outright condemn “live-in relationships.” Since there are still no specific laws addressing “live-in relationships” that have been established by the legislature, it would seem that the generally accepted rule in such cases is that courts of law have a great deal of discretion in determining how fundamental and natural rights should be interpreted to apply in specific circumstances. However, due to the binding character of the Supreme Court of India’s decisions, consensual “live-in relationships” (subject to the age of the majority of both the party) are in themselves not prohibited by law and therefore are not illegal. In the absence of appropriate law on “live-in relationships”, the Indian Judiciary has passed several morally driven judgments. Firstly, we must establish a dividing line between morality, which is full of debates and ambiguous areas, and legality, which is essentially unambiguous. The Judge’s prime responsibility is to uphold the law of the land, not to pass new ones based on personal morality. According to Article 21 of the Indian Constitution, morality is no longer justified once a person enters a space where they have the freedom to make their own decisions and exercise their own agency, which the state has a responsibility to uphold. In order to provide live-in couples with legal protection, the Indian judicial system should consistently apply the right to privacy throughout the entirety of India. Additionally, it is advised that a “live-in relationship” be treated as a domestic matter if they meet the criteria outlin
კეთილსინდისიერების პრინციპის ზეგავლენა დაზღვევის ხელშეკრულებაში
No full textThe purpose of the research topic is to conduct an in-depth study of the issues related to integrity and its protection in insurance relations and to identify legal and practical problems that arise in non-compliance with this principle. Consequently, the goal of the topic is to analyze the mentioned problematic issues, highlight them, and subsequently propose potential solutions and recommendations for the benefit of readers.1 Integrity is the principle of civil turnover, therefore its solidity and stability depend on the integrity of the participants in civil turnover. “Integrity is not only a right but also an assumption of fulfilling a duty, because integrity implies the action of the participants of the civil turnover with consideration and responsibility, treating each other with respect for the rights”;2 Consequently since the insurance contract is a type of civil contract, it is natural that the obligation to protect integrity is also essential in relation to it;3 Nonetheless, I believe that in the case of insurance, protection of integrity acquires an even wider meaning and implication. This is because the fundamental principle and core of insurance contracts is based on the supreme trust between the involved parties. Consequently, if the contracting parties fail to uphold the principle of integrity, it could cast doubt on the existence of the insurance.
Keywords: Insurance, Principle of integrity, Insurance contract
IntroductionThe relevance of the research topic is also determined by the continuous growth and increasing importance of the insurance sector. This is primarily attributed to the rapid pace of global development, where insurance has become an indispensable part of people’s daily lives and existence. For instance, in the United States of America, there’s a prevailing perspective that one cannot exist without insurance. Therefore, the insurance industry continues to evolve daily, and Georgia should be no exception to this trend.
As previously mentioned, integrity is a principle of civil law, and it naturally extends to insurance law. Therefore, I believe it is important to elucidate the principle of integrity and its essence in general: “As per the third part of Article 8 of the Civil Code, participants in a legal relationship shall exercise their rights and duties in integrity”.[1] The above-mentioned norm complements the part of Article 361 of the same Code, which stipulates that the obligation shall be performed duly, in integrity, and at the time and place determined[2] and the aforementioned includes the entire private law.
The principle of integrity in the legislation and doctrine of modern developed countries is largely related to moral standards. Integrity encompasses sincerity, justice, and an honest attitude to fulfilling “obligations”.[3] In essence, it can be described as a commitment to decency, with any breach resulting in accountability.[4]
In continental European law, the principle of integrity urges parties to fulfill their mutual obligations in integrity, based on mutual trust and faith. This principle is analogous to assessing human behavior in terms of moral qualities and interpersonal relationships based on the concepts of good and evil.[5]
Chapter I. The Effect of the Principle of Integrity in the Insurance Contract
The principle of integrity in Georgian contract law is not thoroughly explored, with very few examples of its interpretation in contractual norms where the obligation to adhere to this principle is established. Its essence is primarily dispersed across various sections of the Civil Code, including the chapter on insurance contracts. Thus, it is only through a joint and complex study that we can determine the principle of integrity in insurance relationships. This underscores the relevance of the research topic, highlighting the importance of incorporating foreign doctrine and judicial practice to accurately define its essence and significance.
The principle of integrity in insurance law undoubtedly implies that both parties to the contract, whether it\u27s the insured or the insurer (insurance company), must fulfill their obligations under the insurance contract in a manner that is characterized by integrity, fairness, and honesty, as one would reasonably expect from each other.
As it is commonly known, the primary distinguishing feature of an insurance contract is the principle of uberrimae fidei,[6] signifying the utmost integrity between the parties involved. This principle expresses the essence of the insurance contract itself, where the presence of an element of risk is pivotal. It stems from the fundamental uncertainty of whether an insurance risk will be “realized” i.e. an insurance event. Consequently, the parties are obliged to honestly disclose all pertinent and essential facts within their knowledge, which may influence the terms of the contract or its overall conclusion.[7]
When reviewing the concept of integrity within an insurance contract, it\u27s crucial to discuss the accurate interpretation of when the insurance contract becomes effective. This is significant because it marks the point at which the insurance company’s obligation to provide compensation to the insured originates.[8] And since the issue concerns the issuance of insurance compensation, it is natural that the observance of the principle of integrity acquires special importance, especially since the above-mentioned issue is regulated quite imperfectly by the Georgian legislation.
According to Article 806 of the Civil Code of Georgia, the insurance shall commence at 24:00 on the day the contract is entered into and shall end at 24:00 on the last day of the contract period.[9]And according to Article 816 of the same code, until the first or one-time insurance premium is paid, the insurer shall be free from liability. As observed, the aforementioned two articles exhibit some inconsistency, potentially leading to practical challenges, for example, when a person signs an insurance contract with an insurance company, and the contract does not specify the exact time of payment of the initial insurance premium, the insurer planned to pay it after a few days, however, an insurance event occurred on the second day after the contract was signed, Although the insured had an expectation that the insurance contract was concluded and he/she would receive the insurance compensation, however, the insurance company legally refused to disburse the insurance compensation.
In the given example, it initially appears that there is no evident unconscientious attitude on the part of the contracting parties. Nonetheless, considering that insurance contracts rely on the utmost mutual trust and the principle of integrity between the parties, the insurance company should have, in the spirit of integrity, warned the insured of the mentioned issue during the contract signing process.
This is important because the insured probably wasn’t informed about it and likely had different expectations as a result.
In summary, we can conclude that for the insurance contract to be established and become effective, there’s a requirement for both Articles 806 and 816 of the Civil Code to coexist simultaneously. It would be beneficial if these two regulations were consolidated into a single article, while also specifying the timeframe within which the insurer must make the initial insurance payment, commonly known as the premium (ideally, this should be determined on the same day as the contract signing). This step aims to simplify the contractual arrangements between the parties and minimize the potential for legal disputes in the future.
In this regard, the situation is different in German law, which distinguishes three stages of the beginning of insurance: the “formal” commencement of the insurance, which coincides with the conclusion of the contract by the parties, when all essential conditions are agreed upon,[10] the “technical”\u27 initiation of insurance, wherein the contract is considered finalized based on the date specified in the record or policy; and finally, the “material start of insurance”, where the contract is considered to commence from the moment the insured pays the insurance premium.[11]
Chapter II. Insurance Value
When discussing the principle of integrity in insurance relationships, it is appropriate to consider the issue of insurance value. This is because the principle of integrity holds particular significance in insurance law when evaluating the insurance value.
The insurance value represents the monetary amount at which an individual’s life or health is insured. It is determined through an agreement between the parties, considering the insured risk.[12] Meanwhile, an insurance assessment (or value) is the evaluation of the insured object expressed in monetary terms.[13] It’s interesting to note that “while property insurance restricts the insured amount to the value of the insured object, in contrast to the aforementioned, life insurance places no such limitations. In the case of life insurance, the coverage is unlimited and is solely determined by the agreement of the parties involved in the contract, which is logical given the priceless nature of human life”.[14] However, on the other hand, this flexibility that we enjoy in setting the insurance value for personal insurance carries a certain element of risk, for instance, in the case of life insurance, when insurance is carried out within the limits of a substantial sum insured, the risk of artificially (unfairly) causing an insurance event naturally increases, which primarily endangers the insured and their life. In such a case, obviously, we have the composition of the crime, which is punishable by law, but to protect the insured’s life and health from such cases as much as possible, I believe it is necessary for the legislator to define the scope of the insurance value even more strictly, and in each specific case, before signing the insurance contract, a thorough analysis, study, investigation, and personalized approach to each insured object should be conducted prior to signing the insurance contract, we can also use an illustration from the United States, where if an individual consumes even a few cigarettes daily, or half a pack, they are categorized as smokers and may not be able to sign a life insurance contract with the company at all,[15] or receive it but within the limits of another insurance amount (far more expensive or more in a smaller amount than in the case of a non-smoker).[16]
In addition to this unique aspect, “insurance companies in the United States typically collaborate with specialized medical institutions before concluding a life insurance contract. These institutions serve as information centers regarding individuals who have applied for life insurance from other participating companies”.[17]
A noteworthy aspect is that the insurance company has the authority to seek information about the prospective policyholder from their physician before finalizing the insurance contract.[18] This practice provides an added layer of protection for both the insurer and the insured. I believe that this meticulous and thorough approach sets a high standard for insurance practices in this country, and it would be beneficial to consider incorporating a similar approach into our legislation.
Chapter III. Insurance Risk
Insurance risk is one of the main foundations of the insurance relationship. It refers to the situation outlined in the contract, the occurrence of which could result in the insurer’s loss or reduction of their property interest. [19] These events are primarily characterized by the fact that the parties to the contract can assume only the possibility, probability, and not the inevitability of its occurrence. In relation to the assessment of insurance risks, insurance companies, as a rule, have developed for a specific type of insurance, written questionnaires about the circumstances of the risk. It is the insurer’s responsibility to provide an accurate answer to this questionnaire. In relation to this, Article 810 of the Civil Code stipulates the following; “If the insured was required to respond to written queries about the circumstances of a danger, the insurer may terminate the contract for the failure to communicate the circumstances, which, though not inquired about, were intentionally withheld by the policyholder”.[20] This means that the insured is obliged, in integrity, to inform the insurance company about a danger that no one inquired about but of which the insured had specific knowledge, and deliberately and unconscientiously concealed such a fact.
The article mentioned above undeniably safeguards the principle of integrity in insurance relationships. Violating this principle can undermine the very foundation of the insurance system, as the essence of insurance lies in the parties having only the probability or assumption of an insured event occurring. This assumption is the main distinguishing feature of an insurance contract from other types of contracts, and naturally, if the parties fail to uphold the principle of integrity in assessing insurance risk, we will not have an insurance contract.
Conclusion
As a result of the research, the special importance and influence of the principle of integrity in the insurance contract was highlighted. While this principle may not be explicitly defined by legal regulations, this principle holds such significance in insurance relationships that it can be regarded as the primary and fundamental foundation for the formation of insurance contracts.
While working on the paper, a comparative-legal analysis was conducted, primarily focusing on foreign countries, particularly in relation to the United States of America. As a result, it was determined that it is appropriate to incorporate a requirement to protect the principle of integrity in the legal norms governing insurance relations, and it is also important to instruct the parties to an insurance contract to act with integrity towards each other.
It is crucial to emphasize the importance of safeguarding integrity when calculating insurance risk and value. In this context, it would be beneficial for the legislator to consider practices in the United States of America and adapt them to the specific needs of the Georgian population in our legislation, although not necessarily identical to those in the aforementioned country.
As it is well known, the legislation undergoes certain changes along with the development of the country, which is a natural process. Nevertheless, I believe that the insurance law lags behind other agreements outlined in the Civil Code. This is primarily due to the continuous growth of the insurance sector, as previously mentioned. It is evident that the applicable law in Georgia “On Insurance”, including those in the Civil Code, no longer adequately addresses the contemporary demands of the insurance market. Consequently, this deficiency leads to complex insurance relationships. This is why it’s crucial to undertake the so-called “modernization” of insurance legislation and establish a strong foundation for the country\u27s progress. For example, I propose consolidating Articles 801-816 into a single provision to accurately define the commencement of the insurance contract’s effectiveness. Additionally, it would be beneficial to specify the time for the payment of the initial insurance deposit (premium).Based on all of the above, I believe that this field requires revision and refinement by the legislator.
Bibliography
Commentary on the Civil Code of Georgia, book four, volume II Tbilisi, 2001; (Internet) available at:https://library.iliauni.edu.ge/wp-content/uploads/2021/06/44.-samoqalaqo-kodeqsis-komentari-tsigni-II-sanivtho-qonebrivi-samarthali.pdf[Date accessed23.04.2023.]
Iremashvili K. Online commentary on the Civil Code, gccc.ge, 16.03.2016 (Internet) available at:http://lawlibrary.info/ge/books/giz2019-ge-civil_code_comm_III_book.pdf[Date accessed23.05.2023].
Vashakidze G. Integrity according to the Civil Code of Georgia or applicable law, "Georgian Law Review", 2007, (Internet) available at:https://newvision.ge/geo/review-of-georgian-law/georgian-law-review-archive[Date accessed23.05.2023].
Dzagnidze D. The meaning of insurance premium, Tbilisi, journal Individual and Constitution N3, 2003;
Kakashvili N. Insurable and uninsurable risks, Tbilisi, Journal of Business and Legislation 2009;
Khunashvili N. Dissertation paper, Tbilisi 2014;(Internet) available at: https://press.tsu.ge/data/image_db_innova/disertaciebi_samartali/nino_xunashvili.pdf[Date accessed 01.06.2023].
Soziashvili N. The effect of the principle of integrity in the insurance Contract, paper, Tbilisi, 2023
Soziashvili N. The principle of integrity in insurance relations, planning and design of a research paper, Tbilisi, 2021;
Soziashvili N. Social and legal aspects of life insurance, scientific journal, LEPL David Aghmashenebeli National Defence Academy of Georgia, Gori 2022 (Internet) available at:https://www.researchgate.net/publication/367148715_ssip_-davit_aghmasheneblis_sakhelobis_ssip_-davit_aghmasheneblis_sakhelobis_sakartvelos_erovnuli_tavdatsvis_akademia_sakartvelos_erovnuli_tavdatsvis_akademia_LEPL_-DAVID_AGHMASHENEBELI_LEPL_-DAVID_AGH[Date accessed 10.06.2023].
Iremashvili K. Peculiarities of legal regulation of insurance, “Journal of Law”, Faculty of Law of Ivane Javakhishvili Tbilisi State University, N2, 2011; (Internet) available at:: https://jlaw.tsu.ge/index.php/JLaw/issue/archive[Date accessed 01.06.2023].
iremaSvili q. sadazRvevo interesis doqtrina da mis mimarT gamoTqmuli kritikis analizi, `samarTlis Jurnali”, ivane javaxiSvilis saxelobis Tbilisis saxelmwifo universitetis iuridiuli fakulteti, #2, 2013; (Internet) available at:https://jlaw.tsu.ge/index.php/JLaw/issue/archive[Date accessed 01.06.2023].
Jerry Ruchmond D. undestanding Insurance law. 4th Edition, 2007;
Internet resources:
http://www.insurance.com/life-insurance/life-insurance-basics.aspx [Date accessed 23.05.2023]
http://heconomic.wordpress.com/2010/07/12/tengiz-verulava-13 [Date accessed 23.05.2023]
http://elawjournal.wordpress.com/2012/02/05/
(Date accessed 23.05.2023)
http://saqartvelo201206.blogspot.com/2012/06/blog-post.html
[Date accessed 01.06.2023]
http://www.usa.gov/Citizen/Topics/Health/HealthInsurance.shtml[Date accessed 01.06.2023]
supremecourt.ge[Date accessed 01.06.2023]
Normative material:
Civil Code of Georgia. date of adoption 26/06/1997. [Internet] https://matsne.gov.ge/ka/document/view/31702?publication=122 [Available at 23.02.2023]
Law of Georgia on Insurance, Tbilisi, Parliament of Georgia, 1997https://matsne.gov.ge/ka/document/view/31702?publication=122 [Available at 23.02.2023]
Footnotes
[1] Supreme Court of Georgia, Chamber for Civil Cases, Case No. AS-1338-1376-2014, June 29, 2015.
[2] Civil Code of Georgia, Tbilisi, 1997 (as of 01.11.2022).
[3] Supreme Court of Georgia, Chamber for Civil Cases, Case No. AS-1338-1376-2014, June 29, 2015.
[4] Decision of the Supreme Court of Georgia of June 29, 2015 No. AS-1338-1338-2014.
[5] Khunashvili N. Dissertation paper “Principle of integrity in contract law”, University Publishing House, Tbilisi 2014; p: 12.[6] Soziashvili N. Social and legal aspects of life insurance, scientific journal, David Aghmashenebeli National Defence Academy of Georgia, 2022. p: 77.
[7] Ibid, p:106.
[8] Soziashvili N. Thematic seminar, Comparative-legal analysis, social and legal aspects in insurance law, Tbilisi, 2020.
[9] Civil Code of Georgia, 1997 (as of 01.06.2021).
[10] http://heconomic.wordpress.com/2010/07/12/tengiz-verulava-13/.(last checked on - 08.15.2022).
[11] http://elawjournal.wordpress.com/2012/02/05/დაზღვევის-ინსტიტუტის-წა/(last checked on - 15.08.2022).
[12] Soziashvili N. Social and legal aspects of life insurance, scientific journal, David Aghmashenebeli National Defence Academy of Georgia, 2022. p: 78.
[13] Dzagnidze D. The meaning of the insurance premium in the insurance contract, Tbilisi, “Individual and Constitution” journal, N3, 2003, p:71.
[14] Soziashvili N. Social and legal aspects of life insurance, scientific journal, LEPL David Aghmashenebeli National Defence Academy of Georgia, 2022. p: 78.
[15] Ibid. p: 79.
[16] Ibid. P: 79.
[17] Soziashvili N. Social and legal aspects of life insurance, scientific journal, David Aghmashenebeli National Defence Academy of Georgia, 2022. p: 79.
[18] http://www.usa.gov/Citizen/Topics/Health/HealthInsurance.shtm[Access date23.05.2023].
[19] Soziashvili N. The effect of the principle of integrity in the insurance Contract, paper, Tbilisi, 2023.
[20]Civil Code of Georgia, Tbilisi, 1997 (as of 01.11.2022).
საკვლევი თემის მიზანს წარმოადგენს სადაზღვევო ურთიერთობებში კეთილსინდისიერებასთან და მის დაცვასთან დაკავშირებული საკითხების სიღრმისეული შესწავლა და იმის გარკვევა, თუ რა სამართლებრივი თუ პრაქტიკული პრობლემები ჩნდება მისი შეუსრულებლობისას, შესაბამისად თემის მიზანს წარმოადგენს აღნიშნული პრობლემური საკითხების გაანალიზება, მათი წინ წამოწევა და შემდგომ უკვე მათი გადაჭრისა და მოგვარების შესაძლო გზების და რეკომენდაციების მოძიება და მკითხველისათვის შეთავაზება.1 კეთილსინდისიერება სამოქალაქო ბრუნვის პრინციპია, ამიტომ მისი სიმყარე და სტაბილურობა სამოქალაქო ბრუნვის მონაწილეთა კეთილსინდისიერებაზეა დამოკიდებული. „კეთილსინდისიერება არა მარტო უფლების არამედ მოვალეობის შესრულების ვარაუდიცაა, რადგანაც კეთილსინდისიერება გულისხმობს სამოქალაქო ბრუნვის მონაწილეთა მოქმედებას გულისხმიერებით და პასუხისმგებლობით, ერთმანეთის უფლებისადმი პატივისცემით მოპყრობას“2 შესაბამისად, გამომდინარე იქიდან, რომ დაზღვევის ხელშეკრულება სამოქალაქო ხელშეკრულებების ერთ-ერთი სახეა, ბუნებრივია მასთან მიმართებითაც მნიშვნელოვანია კეთილსინდისიერების დაცვის ვალდებულება,3 თუმცა, ვფიქრო
BUSINESS ACTIVITIES AS A MECHANISM TO ACTIVATE THE LEGAL PRESENCE OF WOMEN – A STUDY IN ALGRERIAN LAW
Full text linkEquality is the basic principle that all rights and freedoms are based on at present. It prevents every discrimination of any kind, which is sought by national and international trade laws alike, and this is to create opportunities to enable women to establish their legal presence in the labor market by Providing a work environment that preserves women’s rights and is supportive and stimulating for them while being keen to demonstrate the difficulties faced by this on the one hand, and facilitating the exercise of their business and commercial activities on the other hand. This is what the Algerian constitution expressly calls for by devoting the principle of freedom of trade and competition, in addition to opening the way for the time being to commercial investments, which do not differentiate between a man and a woman.
Keywords: Women, Trade, Rights, Investment, Freedom.
Introduction
The principle of equality is the most important constitutional and humanitarian principle, which people are keen to uphold and support. Societies should not be based on human discrimination, whether in terms of origin, sex or religion, which is why various international conventions and treaties affirm this right.[1]
On this basis, legal equality between men and women emerged, i.e., equality in treatment, which depends on fulfilling the conditions prescribed in constitutions and laws to ensure the effectiveness of their application to all holders of similar and similar legal positions.[2]
In line with the economic reforms undertaken by the Algerian legislator through the constitutional amendment of 2016, he adopted a policy of economic freedom more clearly with an expansion of the scope of transactions by recognizing freedom of trade, investment and competition, with guarantees by the state to provide a favorable climate for business[3] through public and private commercial laws.
To establish their legal status as an active position in society, women must participate in all areas of life and extend their practical influence in parallel with men.
Therefore, at the beginning of the twentieth century, women became engaged in trade like other professions and even expanded their field of activity beyond the borders of the State through the conclusion of international commercial operations, thus competing with men in the activity that was believed to be exclusive to them.
However, for economic democracy to be achieved between both sexes, women must also be subject to all the dictates of the State, which are the basis for transparency and fairness in business practice. Most fields of economic activity have been the subject of attention by the legislators, so many legislative and regulatory texts related to the Algerian Business Code have been enacted, which have witnessed great development at all levels. Therefore, this topic poses the following problem: What are the manifestations of women’s legal rights in trade systems?
To answer this problem, we will divide this study into two parts, dealing in the first section with the dedication of constitutional principles to create a commercial presence for women, and in the second section, we will address the requirements of the work environment that preserves the rights of women traders.
1. The dedication of constitutional principles to create a legal presence for women
After Algeria adopted a policy of economic openness, amendments were made to legalize the issue. The most important of these amendments was enshrined in the Algerian Constitution through its principles to establish a commercial legal base that seeks to create equal opportunities for all in the commercial field. This leads women to be able to delve into this field without hesitation.
The most important constitutional principles addressed in the constitution were the principle of freedom of trade and industry, freedom of investment (the second requirement), and freedom of competition, which we will elaborate on successively.
1.1. The principle of freedom of trade and industry
The legislator has not only devoted the legal presence of women in the commercial field through the issuance of a scattered set of legal texts but it has also been constitutionally enshrined by including the principle of freedom of trade and industry for the first time in Algeria with the text of the Constitution of November 16, 1996, where the content of article 37 of it states that: “Freedom of trade and industry is guaranteed and exercised within the framework of the law”.
With this provision, the Constitution has given sufficient protection to women in the commercial field against all forms of infringement that may occur against them, whether issued by the State or privately. The legislator has excluded all barriers and obstacles that prevent them from participating in the development process after they were previously the preserve of the merchant man.
The principle of freedom of trade and industry is the most fundamental principle in the field of trade and is a clear reflection of the economic ideas adopted by the State.
Article 37 states that it is absolute without specification, as it does not discriminate between Algerian men and women or foreigners with regard to the benefit of this freedom.
The legislator also took this principle with several guarantees, including guaranteeing the legality of expropriation,[4] guaranteeing the integrity of state institutions in dealing with investments,[5] guaranteeing freedom of intellectual, artistic, and scientific innovation,[6] and guaranteeing the right to private property.[7]
Thus, this principle of freedom of trade and industry is no longer confined to legal and legislative texts but has gone further by establishing a constitutional framework for it. However, freedom of trade and industry does not mean unconditionally exercised or even a repudiation of applicable legal obligations but is intended to be exercised in a regulated, clear and non-exclusive framework for a particular group or person. Economic activities must be subject to the text of the law to be binding on all and exclude only those expressly excluded by law.[8]
One of the principles contained in this principle is to prevent the public authority from embarking on the regulation of the economy, as it is synonymous with free competition, which is difficult to distinguish between them, as both define the stage of comprehensive economic liberalism.[9]
It is a set of freedoms that vary according to the role they play in confronting the public basket, but this freedom is limited by considerations of public interest and the need to maintain public order, which allows the public authority to intervene to achieve the goal of this principle.[10]
1.2. The principle of freedom of investment
This principle was first enshrined in Law No. 90/10 of April 14, 1990, on currency and loans, where article 183 states: “Non-residents are authorized to transfer capital to Algeria to finance any economic activities not expressly allocated to the State, its subsidiary institutions or any legal person...” Article IV of Ordinance No. 01/03 of August 20, 2001, on Amended and Supplemented Investment, stipulates: “Investments shall be made in complete freedom, subject to the legislation and regulations relating to regulated activities...”.
Article 43 of the Constitution explicitly stipulates this principle: “Freedom of investment and trade is recognized and exercised within the framework of the law.
The State shall endeavor to improve the business climate and encourage the prosperity of enterprises without discrimination in the service of national economic development.
The State shall guarantee market regulation, and consumers shall be protected by law.
The law prohibits monopoly and unfair competition”.
1.3. The principle of freedom of competition
It represents the mechanism by which it operates in the market, emphasising the free dealing between all parties involved in the commercial field.
Through its legal texts, the legislator has adopted this principle by regulating the competitive course of economic activities, explicitly recognizing the freedom to compete and set prices, and limiting practices that may violate them.
The legislator subjected all persons engaged in economic activities to the controls of competition rules, regardless of their nature or sex, as confirmed by Article 2 of Law No. 10/05,[11] which emphasizes the equality of all market players in the face of the provisions regulating the competitive process, including equal opportunities, and making them available to all and at the same time protecting competition and competitors.[12]
To ensure the protection of competition, restrictive practices of competition have been prohibited under article VI of the aforementioned Competition Act, which is confirmed by the last paragraph of article 43 of the Constitution by recognizing the need for competition to be fair.
2. The requirements of the work environment to preserve the rights of women traders
For women to do business and acquire the legal status of merchants, there must be a legal environment that preserves their rights vis-à-vis third parties. Therefore, reference must be made to the provisions of the first article of the Commercial Code, which states: “Any natural or legal person who carries out a commercial business and takes it as a habitual profession shall be considered a merchant unless the law provides otherwise”.[13]
Among the conditions required by the Algerian legislature are that women be professional in carrying out business, be independent in the exercise of such business, and have the legal capacity to enable them to carry out legal acts.
2.1. Business professionalism
A merchant is a person whose profession is to do business professionally; to achieve this, you must do business. In carrying out commercial business, the legislator intends to carry out the substantive acts mentioned in article II of the Commercial Code and not to ancillary businesses since the latter requires the capacity of a merchant in the person who performs them.
Professionalism[14] is the practice of business regularly and in some form of acquisition and subsistence, and therefore must:
2.1.1.Carrying out work in a consistent manner
That is, on a regular basis, and therefore not to practice business casually or sporadically.
2.1.2. Carrying out work on an ongoing basis
That is, the repetition of doing the business, and the problem is whether the caretaker of the business, according to the individual subject, acquires the status of a merchant. The answer to this question is no because repeating the business is required for its owner to acquire the status of a merchant.
2.1.3. Means of Livelihood
Business must be a person’s usual profession for his livelihood, and not a side job, i.e. an essential work under which a person acquires the status of a merchant.[15]
2.1.4. The rules of practicing commercial professions should be fulfilled
According to the principle of freedom of trade and industry, a person is free to practice any work of any kind, but this freedom is not absolute but is limited by public order on the one hand and a set of general rules on the other hand, which is mainly represented in the rule of non-prevention of practising the activity as one of the prohibited commercial activities such as the sale of weapons and drugs. The rule of non-incompatibility, in which the profession of practising trade is incompatible with other professions, and therefore it is not permissible to acquire the status of a merchant, such as practising the profession of judiciary and accounting. In addition to the rule of non-lapse, which the legislator prohibited some persons who have been subjected to criminal penalties or who have been declared bankrupt from practising trade.[16]
Consequently, the business of women traders must be professional, so that it can be said that the first conditions for acquiring a commercial status have been met.
2.2. Independence in the exercise of trade
That is, a person carries out substantive business in his name and for his account and in the form of independence, such as starting a commercial enterprise and personally bearing the risks resulting from it.[17]
It should be noted that Ordinance 75/59 did not stipulate this requirement, but the Law on the Commercial Register provided that any natural person enjoying his civil rights could expressly express his desire to engage in business in his name and on his account.[18] That is, there should be a direct relationship between the merchant and the business he is responsible for. A worker in a commercial shop is not considered a merchant because he does not carry out business for his account, but for others.
Therefore, women who want to engage in trade must do this work for their account and in their name to acquire commercial status.
2.3. Commercial Eligibility
By extrapolating the Commercial Code, we find that it did not include a special provision for commercial capacity, which must refer to the general rules. While we find him referring to the actions of the minor merchant and the married merchant woman.
2.3.1. General Eligibility Conditions
Article 40 BC states: “Every person who has attained the age of majority and enjoys his mental faculties and has not been interdicted shall have full capacity to exercise his civil rights.
The age of majority is 19 full years”.
Under this article, which has no counterpart in commercial law, a person becomes eligible to engage in legal acts, including the practice of trade, unless there is a legal impediment. A legal impediment may be an impediment to capacity or an impediment to the exercise of trade. With regard to symptoms of eligibility, such as dementia, insanity, foolishness and inattention, each of their actions is either null and void, they cannot engage in business, and they do not have any penalty if they do so, and they can annul contracts concluded at that time.
2.3.2. Actions of the minor
Under Articles V and VI of the Commercial Code, the legislator has clarified the conditions a minor must meet to engage in trade and the resulting effects.
2.3.2.1.Conditions for qualifying a minor to practice trade
Under Article V of the Commercial Code[19] a minor must meet three conditions to be eligible to conduct business:
The minor has completed the age of 18 years.
The minor obtains permission to engage in trade from her father or mother or a decision of the family council approved by the court whether her father is deceased or absent, or his parental authority has been revoked or impossible for him to exercise it, or in the absence of a father or mother.
The permission to engage in trade must be in writing and may also be a general or specific permission for certain operations.
Registration of the permission in the commercial register to inform third parties dealing with the minor guide.
2.3.2.2. Effects of qualifying a minor to engage in trade
If the conditions above are met, a minor, male or female, can practice business. He may carry out all actions, including arranging a mortgage or any obligation on his real estate, provided that the disposition of the latter can only be done by following the procedures related to the sale of the property of minors or incapacitated, and this is in accordance with article VI of the Commercial Code, which states: “Minor traders licensed in accordance with the provisions of article 5 may arrange an obligation or mortgage on their real estate.
However, the disposal of such funds, whether voluntary or forced, can only be effected by following the forms of procedure relating to the sale of the property of minors or incapacitated persons”.
2.3.3. Married women who are merchants
Article 7 of the Commercial Code states: “A merchant’s husband shall not be considered a merchant if he carries on a commercial activity subordinate to that of his spouse.
He shall not be considered a merchant unless he carries on a separate business”.
The legislator has stipulated that a separate commercial activity be exercised for both the wife and husband and that no subordinate activity should be practised.
It is also inferred from the term “wife” that it accrues to the husband or wife. If a man is a merchant, his wife cannot engage in business activity unless her activity is separated from that of her husband and vice versa.
However, the legislator did not clarify what the phrase “separate business” meant in the text. Does this mean legal or practical separation? The Algerian legislature should have intervened to clarify the ambiguity.
Thus, it can be said that women are subject to the same conditions as men without restriction or conditions, as confirmed by the text of Article VIII of the Commercial Code.[20]
In addition, and through all legal texts, and to acquire this status vis-à-vis everyone and invoke it, it must be registered in the commercial register.
Thus, the Algerian legislature has provided women with a legal environment that enables them to obtain their commercial rights in addition to the constitutional principles and, in return, imposed on them a set of obligations. However, he did not differentiate between male and female or assign additional conditions to her.
Conclusion
Through economic reforms, the Algerian legislature has tried to enshrine certain commercial principles constitutionally to guarantee women’s rights to trade in parallel with men. This depends on the outcome of the following stages of openness and the entry into the era of globalisation.
This issue raises many questions, most of which revolve around the fate of women’s economic activities in the country, the maximum limits for practising these activities, and the restrictions that must be applied in light of the fierce competition, especially if we look at the two opposing phrases contained in Article 37 of the Constitution, which states: “Freedom of trade and industry is guaranteed and exercised within the framework of the law”.
Therefore, we have concluded from this subject two conclusions:
The first concerns considering equality as one of the fundamental constitutional principles on which all commercial rights and freedoms are based.
The second is that equality in trade practice must be actual and real, not just a textual paper.
Therefore, we recommend emphasising women’s role in activating constitutional principles on the ground through their economic activities, in which they sometimes surpassed the male trader through the sweep of “businesswomen” into the world of commerce.
Bibliography
BOOKS:
Ahmed, M. (1980). Algerian Commercial Law 2(1).
Hassan, A. (N.P.D). Human Rights. Publications Agency Kuwait.
Jajan, A.R., Burghul, A.Q., Fares, O. (2008), Introduction to Commercial Law -Business, Merchant, and Shop-. Directorate of Books and University Publications.
Salah, F.Z. (2003). Al-Kamil fi commercial law -Business - Merchant - Artisan - Organized Commercial Activities - Commercial Register-. published and distributed by Ibn Khaldun.
ARTICLES:
Haddad, Z. (2016). Freedom in the Market Economy and Algerian Legislation. Journal of Human Sciences. 46 (A).
Al-Ferjani, S.A. (2015). The Principle of Equality before the Law and its Applications in Libyan Law, Journal of Legal and Sharia Sciences. (6).
Ajabi, I. (2014). Consecration of the principle of freedom of trade and industry in Algeria. Al-Researcher Journal for Academic Studies, (4).
LEGAL ACT:
Algerian Competition Law (2010). n° 46 <https://www.commerce.gov.dz/reglementation/loi-n-deg-10-05-du-15-08-2010> [Last accessed: 21.06. 2023]
Algerian Commercial Register Law. (1990). No. 90/22. <https://www.commerce.gov.dz/reglementation/loi-n-90-22> [Last accessed: 21.06.2023]
Footnotes
[1] Al-Ferjani, S.A. (2015). The Principle of Equality before the Law and its Applications in Libyan Law, Journal of Legal and Sharia Sciences. (6). p. 227.
[2] Hassan, A. (N.P.D). Human Rights. Publications Agency. Kuwait. p. 66.
[3] Haddad, Z. (2016). Freedom in the Market Economy and Algerian Legislation. Journal of Human Sciences. 46 (A). p. 330.
[4] Article 22 of the Algerian Constitution (2020). < https://www.joradp.dz/TRV/AConsti.pdf> [20 June 2023]
[5] Article 23 of the Algerian Constitution.
[6] Article 44 of the Algerian Constitution.
[7] Article 64 of the Algerian Constitution.
[8] Ajabi, I. (2014). Consecration of the principle of freedom of trade and industry in Algeria. Al-Researcher Journal for Academic Studies, (4). p. 263.
[9] Ahmed, M. (1980). Algerian Commercial Law 2(1). p. 13.
[10] Ajabi, I. previous reference. p. 268.
[11] Algerian Competition Law (2010). n° 46. <https://www.commerce.gov.dz/reglementation/loi-n-deg-10-05-du-15-08-2010> [Last accessed: 21.06.2023]
[12] Haddad, Z. previous reference. p. 334.
[13] This article was amended by Ordinance. (1996). No. 96-27 after replacing the phrase “everybody” with “any natural or legal person”, and changed the word “craft” to “profession” and added the phrase “unless otherwise required by law”, which means that the fulfillment of the conditions mentioned in the article does not directly confer commercial character, as some laws may add their own conditions.
[14] Professionalism differs from hobby in that there is no intention to make a profit or earn, because the amateur wants to spend time and have fun; Jajan, A.R., Burghul, A.Q., Fares, O. (2008), Introduction to Commercial Law -Business, Merchant, and Shop-. Directorate of Books and University Publications. p. 127.
[15] Professionalism differs from habituality, the latter being the repetition of an action from time to time without reaching the point of continuity and regularity.
[16] See Article 381 of the CCP.
[17] Salah, F.Z. (2003). Al-Kamil fi commercial law -Business - Merchant -